2009 SUSTAINABILITY REPORT by fdh56iuoui

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									2009 SUSTAINABILITY
               2   Chairman’s Letter                                External    30 Customers

               4   Executive Summary
                                                                stakeholders    45 Suppliers

                                                                                49 Competitors
Introduction   8   References and Governance
                                                                                56 Institutions
               9   Codes, Charters and Values
                                                                                59 The Environment
               10 Hot Topics
                                                                                79 The Community
               12 Placement in the indexes

               13 Other acknowledgements                             Internal   96 Human Resources

               13 Reporting and Planning                        stakeholders    116 Shareholders

               17 2009 Objectives and Results

               20 2010 Objectives                            Auditors’ report   144 Report of the
                                                                                    Independent Auditors
               22 The Group Sustainability Department                               (Ernst & Young)

               23 Stakeholder Involvement

               26 Economic value generated and distributed
                    CHAIRMAN’S LETTER

                    With its roots in the nancial crisis and the excess-     in 2009 remained substantially stable. These devel-
                    es that caused it, the recession of 2009, one of the     opments – together with many other initiatives, such
                    deepest and most prolonged ever experienced by           as sharing the radio base sites with other operators,
                    the world economy, will for a long time be a reminder    the adoption of green procurement policies in our
                    to us how fragile and at risk development can be         dealings with suppliers, the use of new technologies
                    unless it has an ethically sustainable foundation.       and more ef cient ways of managing the heating of
                    There has been, and will continue to be, much dis-       buildings, reductions in travel and, above all, the re-
                    cussion about rules and control bodies. Certainly,       newal of the company’s eet with vehicles that meet
                    effective improvements can be made in both elds.         the highest standards – have meant that Telecom
                    Nevertheless, responsible behaviour cannot be im-        Italia’s carbon dioxide emissions have been reduced
                    posed by law: it depends on individuals and groups       by more than 2%.
                    making independent, conscious choices. Business-
                    es have a leading role to play in this.                  It is important that we improve our eco-ef ciency (in
                                                                             2009, as these pages report, further progress of
                    At Telecom Italia, we have already made this choice,     12% was achieved). But it is even more important
                     rmly based on our Code of Ethics, and we do our         that the entire economic and social system makes
                    best to make this evident in our daily work, very con-   improvements. Notwithstanding the disappointing
        2           scious that we must continue to strive for improve-      overall outcome of the global summit on climate at
CHAIRMAN’S LETTER   ment. The reason we incorporate social responsibil-      Copenhagen – another of the negative legacies of
                    ity in our strategies and actions, along with respect,   2009 – the response to the challenge of energy ef-
                    professional enhancement and care over safety at          ciency and the reduction of pollution simply cannot
                    work, is because this is the most effective way to       be put on hold. Digital technologies can do much to
                    generate value over time, and to ensure the sustain-     tackle this since they encourage the dematerialisa-
                    ability of our business. It is, therefore, entirely at   tion of the economy, the reduction of the need to
                    one with our responsibility to be competitive, produc-   travel, the control of consumption and the integrated
                    tive and ef cient.                                       management of energy sources. Telecom Italia is
                                                                             also committed to incorporating environmental sus-
                    The sphere in which it is easiest to see the close       tainability in its provision to customers. Alongside
                    correlation between sustainability and competi-          solutions that are now well-established, such as e-
                    tiveness is the environment. The greatest direct         learning, infomobility, video conferencing, e-health,
                    contribution that a telecommunications operator          and networks of sensors for managing lighting, heat-
                    can make to safeguarding the environment lies in         ing and air-conditioning equipment, new provisions
                    the ef cient use of energy. A network that is being      are being added, such as home automation, which
                    expanded to enable it to reach 24 million sites, en-     turns homes into “smart” systems by taking advan-
                    compassing over 15,000 radio base stations and           tage of the possibilities offered by broadband and
                    more than 10,000 telephone exchanges, feeding            mobiles, and communication among different tech-
                    12 data centres in the service of the company and        nological devices. This is not a vision of the future:
                    its customers, consumes a great deal of energy and       it is happening today.
                    tends to consume ever greater amounts, register-
                    ing an increase of around 5% every year. Yet by          Nevertheless, we are well aware that it is not suf-
                    renovating the network architecture, by employing         cient just to say that digital innovation exists and
                    the most modern methods of air-conditioning and by       can be fully exploited. Two questions must be tack-
                    using a combination of alternative, renewable energy     led: on one hand, it is vital that it should be accessi-
                    sources in a clever way, our electricity consumption     ble everywhere, even in the most far- ung areas; on
the other, the expansion of digital literacy must be       balance between working life and free time. We are
accelerated so that everyone can play an effective         aware that we must improve our policies on safety
part in the information society and share in its bene-     at work and, for the rst time, we have set ourselves
 ts. There are two faces to the problem of the digital     precise objectives in terms of reducing the number
divide, one concerning the infrastructure, the other       of accidents, and their severity. It should also be
regarding the cultural aspect. We are continuing to        noted that, in 2009, Telecom Italia launched the
work on both. Across the territory, we are collaborat-     company’s rst initiative for voluntary work in sup-
ing with local institutions in designing and offering      port of children suffering from serious illnesses.
solutions that will allow broadband to be extended
to areas where market demand alone cannot take it,         We are not seeking recognition for all of this. We
and we remain ready to play our part. On the other         are simply following what we believe to be a sound
front, the one related to culture, we have multiplied      and forward-looking business strategy. Nevertheless,
the initiatives aimed at schools, showing the very         the specialists in this eld have shown that they ap-
young and adults how to use the new technologies           preciate our efforts. Telecom Italia is listed in all the
responsibly, and offering digital training for the older   main global sustainability indexes and is considered
generations.                                               the best Italian company in reporting data regard-
                                                           ing climate change. It was the only Italian company
Of course, our interventions at the social level are       to be invited by the European Commission to take                    3

much broader than this. Telecom Italia pays a great        part, on a permanent basis, in the “Environmental,          CHAIRMAN’S LETTER
deal of attention to the needs of the weaker mem-          Social and Governance Workshops”, formed to dis-
bers of society. No-one can forget, for example, the       cuss how to improve reporting and communication
massive, immediate mobilisation of means, tech-            on sustainability issues. These acknowledgements
nologies and company personnel during two major            please and encourage us. They con rm that our
human tragedies, the earthquakes in Abruzzo in             adherence to the principles promoted by the UN’s
the spring of 2009, and in Haiti at the beginning of       Global Compact for the protection of the environ-
2010. Interventions in support of the community,           ment, the respect for human rights and work stand-
moreover, have been boosted by the rapid engage-           ards, the ght against corruption continues to be
ment of the Telecom Italia Foundation which, in its        translated into behaviour and actions: the behaviour
 rst year of life, has already launched a series of ini-   and actions of a company that rmly believes in the
tiatives, including one aimed at the early diagnosis       economic and competitive value of sustainability.
and tackling of dyslexia. In addition, the Foundation      And, strong in this conviction, it will strive – with the
conducted two very successful, well-subscribed com-        maximum transparency and in a spirit of collabora-
petitions, one for a project aimed at nding stable,        tion, with the human and professional energies of
quali ed employment for unemployed, marginalised           its personnel, with its extraordinary technological
or disadvantaged people, and a second for the re-          competence – to contribute to the wellbeing and a
newal of teaching systems in schools through the           better quality of life for all the communities in which
use of the interactive multimedia whiteboard and           it operates.
new technologies.

It is our personnel who make our company’s sus-
tainability real. They have been involved in signi -       Gabriele Galateri di Genola
cant programmes in training and development, in            Chairman
the identi cation and promotion of talent and they
have been receiving support in achieving a healthy
The main results achieved by Telecom Italian in 2009 are given
below, with details of their impact on the stakeholders.

HIGHLIGHTS(1)                                                    REFERENCE TO THE CHAP- IMPACT FOR THE
                                                                 TERS IN THE REPORT     STAKEHOLDERS(2)

A reduction of around 3% in the energy consumed for heat-
                                                                 The Environment/Environ-
                                                                 mental performance/Energy
A reduction of around 5% in the energy consumed for trans-
port, to which the replacement of 1,504 Euro3 vehicles with
                                                                 The Environment/Environ-
                                                                 mental performance/Energy
diesel Euro4 vehicles has contributed

A slight increase in the consumption of electricity              The Environment/Environ-
                                                                 mental performance/Energy
An increase of 12% in the eco-ef ciency indicator                The Environment/Climate
A reduction of around 2% in carbon dioxide emissions             The Environment/Environ-
                                                                 mental performance/Atmos-
                                                                 pheric emissions

A reduction of around 2% in the consumption of water             The Environment/Environ-
                                                                 mental performance/Water
A reduction of around 4% in paper consumed for of ce use         The Environment/Environ-
                                                                 mental performance/Paper
The use of 100% FSC certi ed paper for of ce use and
telephone bills
                                                                 The Environment/Environ-
                                                                 mental performance/Paper
An increase in the percentage of the waste sent for recycling
or recovery (more than 90%)
                                                                 The Environment/Environ-
                                                                 mental performance/Waste
The failure to reach some sustainability targets in 2009         Introduction/2009 Objec-
                                                                 tives and Results
37,000 interventions carried out by the Solidarity ponies in
support of elderly people facing dif culties
                                                                 The Community/Responses
                                                                 to the stakeholders
The launch of 99 fund-raising campaigns and the collection
of 27 million euros through SMS, telephone calls and click
                                                                 The Community/Responses
                                                                 to the stakeholders

Support for the population hit by the earthquake in Abruzzo
through numerous initiatives
                                                                 The Community/Responses
                                                                 to the stakeholders
The encouragement of 6,000 aspiring Web 2.0 entrepre-
neurs through the Working Capital project
                                                                 The Community/Social
                                                                 Media and Digital Communi-

6,700 people over 50 have taken basic Internet courses
thanks to the Internet Saloon initiative
                                                                 The Community/Responses
                                                                 to the stakeholders
      HIGHLIGHTS(1)                                                                            REFERENCE TO THE CHAP- IMPACT FOR THE
                                                                                               TERS IN THE REPORT     STAKEHOLDERS(2)

      1 million individual users have followed AvoiComunicare in
      the course of the year
                                                                                               The Community/Social
                                                                                               Media and Digital Communi-

      An improvement in the majority of the customer satisfaction
                                                                                               Customers/Customer satis-
      The launch of innovative services to reduce the energy con-
      sumption of customers, including in partnership with other

      Numerous initiatives adopted to combat potential abuses
      carried out through the Tlc network
                                                                                               Customers/Protection of
      A reduction of more than 70% in the number of demands for
      conciliation waiting to be considered
                                                                                               Customers/Relations with
                                                                                               consumer associations
      The launch of initiatives to reduce the socio-cultural digital
                                                                                               Customers/Digital Divide
                                                                                               The Community/Responses
                                                                                               to the stakeholders

      At the end of 2009, 96.5% of the total of Telecom Italia’s
       xed lines were covered by ADSL and 57.6% were covered
                                                                                               Introduction/2009 Objec-
                                                                                               tives and Results
      by IPTV

      At the end of 2009, the percentage of the residential popula-
      tion covered by UMTS and HSDPA technology was 83.3%
                                                                                               Introduction/2009 Objec-
                                                                                               tives and Results
      1.8 million hours of training for Italian personnel for direct
      costs of 19.8 million euros. In all, 80.1% of the Group’s per-
                                                                                               Human Resources/Training
      sonnel participated in at least one training session in 2009

      Numerous people caring initiatives were carried out through
      the integrated reconciliation of the family-work balance, rec-
                                                                                               Human Resources/People
      ognised by awards from the Lombardy Region and ALTIS

      Inclusion of the sustainability objectives in the variable pay
      scheme for managers
                                                                                               Human Resources/Remu-
                                                                                               neration policy
      The launch of the Green Procurement Policy                                               Suppliers/Main sustainabil-
                                                                                               ity initiatives
      Inclusion in all the principal global sustainability indexes                             Introduction/Placement in
                                                                                               the indexes
      First place in Italy for the exposition of data regarding
      climate change, in accordance with the Carbon Disclosure
                                                                                               Introduction/Other acknowl-

      Road show conducted with investors in Frankfurt on sustain-
      ability issues
                                                                                               Shareholders/Financial com-

(1) The percentages of increase or reduction shown in the table are calculated based on 2008 data. All the data and information shown in the
    table, unless otherwise stated, refer to Telecom Italia S.p.A.
(2) The symbol !     represents positive impact on stakeholders while the symbol #    represents negative impact.
       The priorities of Telecom Italia:
       excellence in customer satisfaction,
       technological innovation, financial
       discipline and cash generation,


       8          For 13 years, Telecom Italia Group has been analys-       ples of the main point of reference at the global lev-
INTRODUCTION      ing its own performance with regard to those inter-       el, that is, the Global Compact, which was launched
                  ested parties with whom it interacts daily, that is,      in 2000 by the UN to promote the protection of the

 references and   the stakeholders: Customers, Suppliers, Competi-          environment, respect for human rights and working
   governance     tors, Institutions, the Environment, the Community,       standards, and anti-corruption practices.
                  Human Resources and Shareholders.                            The System of Sustainability Management also
                      In demonstration of the importance that Telecom       takes into account the principal reference regula-
                  Italia attributes to sustainability, the information      tions and international standards:
                  concerning activities that regard the stakeholders             the Directives, Recommendations and Commu-
                  has, since 2003, formed part of the Report on Oper-            nications of the European Commission;
                  ations, in con rmation of the Group’s determination            the OCSE guidelines directed at multinational
                  to integrate its nancial and non- nancial data.                enterprises;
                                                                                 the ISO 9000 and ISO 14000 certi cates gov-
                                                                                 erning Quality and Environmental Management
                                                                                 the principles of the Conventions of the Inter-
                  The Telecom Italia Group acts in the conviction that           national Labour Organisation (ILO) on respect-
                  business activities should be conducted in consid-             ing the fundamental rights of workers;
                  eration of the expectations of the stakeholders, in            the Social AccountAbility 8000 standard
                  line with the principles established by internationally        (SA8000), aimed at promoting respect for hu-
                  recognised standards. In de ning and implement-                man rights and working conditions by compa-
                  ing the strategies and programmes of sustainability,           nies and their supply chains;
                  the Group makes reference to the guidelines issued             AA1000 AccountAbility Principles Standard
                  by the main global organisations of guidance and               (APS 2008) drawn up by AccountAbility, an
                  standardisation on the matter of Corporate Respon-             international organisation which promotes col-
                  sibility.                                                      laboration between stakeholders, and lays out
                      In 2002, Telecom Italia subscribed to the princi-          standards and guidelines on matters of sus-
      tainability. The APS 2008 establishes the prin-         The Charters of Services lay down the principles
      ciples that a company must respect in order          of conduct and the commitments undertaken by Tel-
      to qualify itself “responsible” (accountable),       ecom Italia on matters regarding services, as well
      which are covered in the paragraph “Reporting        as giving information about the channels through
      and Planning”. The Group, for the rst year, ini-     which customers can make contact and about the
      tiated the activities necessary to ensure con-       standard of quality of the services provided. These
      formity with the standards on the part of the        Charters are available on the websites of Telecom
      Independent Auditors, Reconta Ernst & Young          Italia (www.187.it, www.191.it, www.tim.it).
      (see Report of the Independent Auditors).               Alongside Telecom Italia’s Charters of Serv-
                                                           ices, there are the General Conditions of Subscrip-
The Group’s Corporate Governance system is found-          tion which govern contractual matters concerning
ed on the central role of the Board of Directors and       the service provided by Telecom Italia. The General
the independent administrators, the transparency           Conditions of Subscription for xed telephone
of management decisions, the effectiveness of the          services are published in the rst pages of the tel-
Internal Control System and on the the strict regula-      ephone books, and on the websites www.187.it and
tions on potential con icts of interest. Within the        www.191.it.
Internal Control System is the Organisational Model           The Charters of Services and the General Condi-
of the Decree Law of June 8th, 2001, no. 231, de-          tions of Subscription are drawn up on the basis of
signed to prevent the commission of certain infringe-      the guidelines and requirements under the various
ments, including corruption, extortion and corporate       resolutions of the Italian Communications Author-
crimes. For further information, see § Shareholders/       ity (AGCOM). In particular, on matters of quality, the
Corporate Governance. Sustainability issues are sub-       goals set on yearly basis for the individual services
ject to the supervision of the Committee for Internal      ( xed and mobile voice telephony, access to the In-                9

Control and Corporate Governance, which carries out        ternet, pay TV on IP – IPTV technology) are published       INTRODUCTION
a check on sustainability activities in general, includ-   on the websites of reference.
ing projects conducted by the Telecom Italia Founda-                                                                    codes, charters
tion, to ensure they are consistent with the Group’s       The other commitments undertaken by the Group                  and values
ethical values.                                            are contained in the following documents, which are
                                                           available in the sustainability section of the Internet
                                                                   Social responsibility in the Telecom Italia
                                                                   Group on compliance with labour standards
The commitments undertaken by the Group towards                    within the Group, with particular reference to
its stakeholders are expressed in a system of Char-                child labour, forced labour, health and safety,
ters and Codes, which are available on the Internet                freedom of association, discrimination, discipli-
site www.telecomitalia.it (Corporate/Sustainability/               nary procedures, working hours and pay.
Our approach/Policies).                                            Relations with suppliers in Telecom Italia
   At the heart of the system is the Ethical Code, an              Group’s procurement process which governs
expression of the conviction that a successful busi-               the negotiating ethic of the Group (transparen-
ness cannot disregard ethics in the conduct of its                 cy, the separation of roles, fairness and trace-
affairs. The Code lays out the goals and guiding prin-             ability) and the requirements that Telecom
ciples at the centre of the business activities in rela-           Italia demands of its suppliers in the area of
tion to the main stakeholders with whom the Group                  working and environmental standards.
interacts. Respecting the Code is a requirement for                Green Procurement Policy which obliges the
statutory bodies, managers and employees of all the                company to take environmental factors into
companies of the Group, as well as for collaborators               consideration in the procurement speci ca-
and third parties in business relationships with the               tions.
Group, within the boundaries of their respective com-              Codes covering the protection of minors (Self-
petence, functions and responsibilities.                           regulation codes for the mobile services, Self-
                    regulation Code for TV and minors, Code of           events. To seize and develop any opportunities,
                    Conduct for premium services). In these mat-         even if initially unpromising, that the individual may
                    ters, the company subscribes to the European         encounter within their sphere of activity, and to ad-
                    Regulatory Framework for the protection of mi-       vance proposals and initiatives that may be useful in
                    nors in the use of mobile telephones.                achieving the goals of the company and the Group.
                    Codes on information on sports and in rela-
                    tion to the representation of judicial proceed-      Time management
                    ings in radio and television programmes.             To consider time as an important resource that im-
                    Guidelines of the Telecom Italia Group on            pacts on the costs of the services provided and on
                    voluntary contributions to the Community,            the loyalty of both internal and external customers.
                    orienting the Group’s donations and voluntary        To meet needs and problems and handle multiple,
                    interventions in support of the development of       sketchy inputs, working out timely and practical solu-
                    the community in which it operates.                  tions.
                    Self-regulation code on commercial communi-
                    cation which regulates advertising.                  Integration
                    Codes guaranteeing propriety in relations            To work together with team spirit, minimising dis-
                    with the OLO (Other Licensed Operators).             putes and maximising the effectiveness of the
                                                                         exchange of information and professional contribu-
               The System of Values adopted by Telecom Italia is         tions, working towards a common goal for the com-
               the benchmark for the conduct of all those who work       pany and the Group.
               for the Group, creating a sense of belonging to a sin-
               gle organisation. The various corporate processes         Transparency
     10        and systems for development and rewards, and for          To ensure ethically-correct business conduct; to
INTRODUCTION   the assessment and training of staff, are inspired by     maintain internal and external relations that are cor-
               the Charter of Values, thereby orienting individual at-   rect and honest, favouring the circulation of informa-

  hot topics   titudes in a common direction throughout the whole        tion.
                                                                         Professional excellence
               Focus on the customer                                     To continuously improve one’s own abilities, taking
               To consider the customer as the main employer, and        responsibility for one’s own professional growth in
               customer satisfaction as the core value. To be ready      order to contribute to the success of the company
               to listen to both internal and external customers,        and the Group.
               and to take steps to anticipate and respond rapidly
               to emerging requirements.

               Taking responsibility
               To participate in the achievement of tangible results     Sustainability concerns all the company processes
               and to accept delegation as an opportunity, without       but certain matters are of particular importance
               referring problems to management that are within          and are consequently given special consideration in
               the individual’s sphere of competence.                    implementing the model of Corporate Responsibility
                                                                         de ned by the company. These are the “Hot Topics”
               Innovation                                                of sustainability, which have been identi ed by Tel-
               To ensure the development of innovative solutions         ecom Italia Group on the basis of:
               and promote new ways to improve the existing proc-                 requests made by the Sustainability rating
               esses and systems in order to reinforce the posi-                  agencies for admission to sustainability in-
               tioning of the company in the market.                              dexes, through questionnaires assessing the
                                                                                  Group’s performance;
               Proactivity                                                        requests from investors during the dedicated
               To make things happen, rather than reacting to                     road shows or one-to-one contacts;
     analysis of the media and reports published by            The Hot Topics identi ed in this way, together with
     the specialist agencies;                                  other aspects of the company’s activities, are taken
     benchmarking of the sustainability activities             into consideration in determining the materiality
     carried out by other companies, in Italy and              of the reporting, in accordance with the standard,
     abroad.                                                   AA1000 AccountAbility Principles Standard (APS), re-
                                                               ferred to in the paragraph “Reporting and Planning.”


ISSUES              STAKEHOLDER             TELECOM ITALIA COMMITMENT                       REFERENCE

Relations with      Customers               Attention to the needs of the customers         Customers/Focus on Custom-
customers                                   and the improvement in the level of their       ers/Customer Satisfaction
                                            satisfaction are among the main objectives
                                            of Telecom Italia and are the subject of
                                            numerous projects and initiatives.

Digital Divide      Customers,              The dissemination of communications tech-       Customers/Digital Divide
                    Institutions, The       nologies can create social and geographi-       The Community/Responses
                    Community               cal discrimination. The risk of exclusion       to the stakeholders
                                            is especially high for certain population
                                            bands, such as the elderly, the sick and the
                                            disabled. Telecom Italia has undertaken
                                            numerous initiatives to ensure the wide
                                            availability of the new technologies.

Climate change      Customers, Sup-         The Group is committed to reduce its            The Environment/Climate
                    pliers, Institutions,   emissions of carbon dioxide and provide         Change
                    The Environment,        services which contribute to the reduction                                             11
                    The Community           of the emissions of other sectors.                                                INTRODUCTION
Relations with      Human Resources         Even at a dif cult time for the global          Human resources
employees                                   economy, the Group pays the maximum pos-
                                            sible attention to caring for employees and                                         hot topics
                                            implementing plans to attract and retain
                                            the best talent.

Supply chain        Suppliers, The          With the globalisation of the markets and       Suppliers/Main initiatives of
                    Environment, The        supply, the monitoring of the supply chain      sustainability
                    Community               becomes a vital element in the sustainabil-     The Environment/Product
                                            ity of businesses. The Group is mounting        responsibility
                                            a series of actions designed to protect the
                                            environment and the standards of work,
                                            including the promotion of the principles of
                                            the Life Cycle Assessment (LCA).

Privacy and data    Customers, Institu-     Telecom Italia has implemented a series of      Customers/Research and in-
security            tions                   measures to protect data security and the       novation in e-security/ Protec-
                                            privacy of those who use the networks and       tion of privacy and protection
                                            services.                                       of personal data

Protection of       Customers               The spread of the Internet is a great oppor-    Customers/Protection of
minors                                      tunity but it can also be a source of danger.   minors
                                            Telecom Italia has carried out a series of
                                            measures for the protection of minors from
                                            content that could harm their psychological
                                            and physical development, and to prevent
                                            and detect any abuse carried out through
                                            the telecommunications networks.

Relations with      Shareholders            The dialogue with the investors on nancial      Introduction/Other acknowl-
shareholders/                               and non- nancial issues is of strategic         edgements
investors                                   importance for a major, quoted company.         Shareholders/Financial com-
                                            To improve the communication among the          munication
                                            stakeholders on environmental, social and
                                            governance issues, Telecom Italia has sup-
                                            ported a European workshop on the evalua-
                                            tion of non- nancial performance.
                                                                             of the 4 companies in the sector with the highest
                   The Sustainability indexes are stock indexes in
                   which securities are selected not only on the basis       Telecom Italia has been included in all the important
                   of economic- nancial parameters but also in the           indexes of the Financial Times Stock Exchange for
                   light of social and environmental criteria. The selec-    Good (FTSE4Good):
                   tion process is carried out by specialised agencies                FTSE4Good Global (653 companies);
                   that assess companies on the basis of publicly                     FTSE4Good Europe (264 companies);
                   available information and/or questionnaires, taking                FTSE4Good Environmental Leaders Europe,
                   account of opinions expressed by the media and                     which includes 40 listings selected from the
                   stakeholders. The selection process is extremely rig-              FTSE4Good Europe on the basis of the results
                   orous and only companies deemed worthy are given                   achieved on matters of environmental protec-
                   a place in the indexes.                                            tion.
                      Inclusion in these indexes is of strategic impor-
                   tance to companies, both for the positive repercus-       Telecom Italia is also included in the following in-
                   sions for their reputation and for the fact that, in      dexes:
                   addition to the pension funds and ethical funds, an                Advanced Sustainable Performance Index (ASPI)
                   ever increasing number of investors favour sustain-                Eurozone, made up of 100(1) companies;
                   able companies, considering them to be less risky                  Ethibel Sustainability Indexes (ESI):
                   and more promising in the medium to long term.                      -    Excellence Europe, comprising 198 list-
                   Taking part in the process of evaluation is, moreover,                   ings;
                   a timely moment for re ection within the company                    -    Excellence Global, comprising 134 listings.
      12           on the results achieved. The suggestions of the rat-               KLD Sustainability Indexes:
INTRODUCTION       ing agencies at the end of the process are very use-                -    FTSE KLD Global (GSIN), comprising 630
                   ful in planning improvement actions in the future.                       listings;

placement in the                                                                       -    FTSE KLD Europe (EUSI), comprising 209
    indexes        Telecom Italia has been con rmed in both catego-                         listings;
                   ries in the Dow Jones Sustainability indexes:                       -    FTSE KLD Global ex US Index (GSIXU),
                         Dow Jones Sustainability World Indexes (DJSI                       comprising 452 listings;
                         World), which include 317 leading Sustainabil-                -    FTSE KLD Europe Asia Paci c (EAPSI),
                         ity companies at the worldwide level;                              comprising 401 listings.
                         Dow Jones STOXX Sustainability Indexes (DJSI                 E.Capital Partners Indexes (ECPI):
                         STOXX): the Europe index, made up of 154                      -    Ethical Index Global, comprising 300 list-
                         leading securities at the European level; the                      ings;
                         Euro index, made up of 84 listings in Euroland.               -    Ethical Index Euro, comprising 150 listings;
                                                                                       -    Ethical Index EMU, comprising 150 listings.
                   On the basis of the assessments carried out for                    Axia:
                   admission to the DJSI in 2009, Telecom Italia has                   -    Ethical, comprising 40 listings;
                   been included in the prestigious Gold Class in the                  -    Euro Ethical, comprising 40 listings;
                    xed telecommunications sector of the “Sustainabil-                 -    CSR, comprising 30 listings.
                   ity Yearbook 2010”, published by the SAM (Sustain-
                   able Asset Management) Group, which manages the           Tim Participações, the stock market quoted holding
                   DJSI, and PricewaterhouseCoopers.                         of TIM Brasil Group, has been included in the ISE
                      The Sustainability Yearbook accepts only those         (Índice de Sustentabilidade Empresarial) index, man-
                   companies with the highest score in terms of sus-         aged by Bovespa (the São Paolo stock exchange) to-
                   tainability, divided into three categories: Gold Class,
                   Silver Class and Bronze Class. Speci cally, the xed
                                                                             (1)   To which may be added 20 in the “buffer” zone, that is listings not
                   telecommunications sector is composed of a group                included directly in the index but which may nd places should any
                                                                                   of the 100 companies be excluded during the review processes
                   of 54 companies, while the Gold Class is composed               held during the year.
gether with the Brazilian Environment Ministry, UNEP      Italian company called on by the Directorate-General
and other nancial Sustainability organisations. The       for Enterprise and Industry of the European Commis-
index is composed of the listings of 34 companies         sion to take part in the stable nucleus of stakehold-
that have obtained the highest scores in terms of         ers invited to the ESG (Environmental, Social, Gov-
sustainability, selected on the basis of a question-      ernance) workshops. These are meetings aimed at
naire submitted to the 137 most traded companies          discussing possible actions to improve the reporting
of the Bovespa.                                           and communication on sustainability issues which
                                                          have involved businesses, investors, civil society,
                                                          non-governmental organisations, consumer associa-
                                                          tions, the media, trade unions and institutions in
                                                          the second half of 2009 and in the rst months of
Telecom Italia was again judged by the Carbon Dis-        2010.
closure Project (CDP) to be the best Italian company
in the “Global 500” index in the exposition of data
regarding climate change in the 2009 edition (as
happened in 2008). The CDP is an international initi-
ative, now in its seventh year, which provides instruc-   Reporting
tions on how to measure and represent greenhouse
gas emissions, encouraging companies to focus on          200: this is the number of Key Performance Indica-
risk management and the emerging opportunities in         tors (KPI) used to analyse the performance and
the eld of climate change (for further information,       respective reporting of the multi-stakeholder ap-
see § The Environment/Climate Change).                    proach. These KPI are de ned on the basis of:
                                                               the analysis of the Global Reporting Initiative              13

AvoiComunicare, Telecom Italia’s integrated commu-             (GRI). Initiated in 1997, the GRI has developed       INTRODUCTION
nication project on major social and environmental             universally applicable guidelines for drawing up
issues, won the “Aretê 2009” award, promoted by                the sustainability report, in order to facilitate   other acknowledgements
Pentapolis (Con ndustria) for responsible communi-             comparisons between companies. Telecom Ita-
cation, in the Internet category (for further informa-         lia Group, with the 2008 Sustainability,Report
tion, see § The Community/Social Media and Digital             was ranked A+ by the GRI, the highest level of
Communication).                                                compliance with the principles of reporting and
                                                               the GRI indicators;
Telecom Italia was awarded the “Family-Work 2009”              the demands of the stakeholders;
Prize, devised and promoted by the Lombardy Re-                the questionnaires sent out by the leading rat-
gion in collaboration with ALTIS (Alta Scuola Impresa          ing agencies for the purpose of admission to
e Società, Catholic University) for creating the best          the stock market indexes of sustainability.
integrated system for family-work balance in support
of its employees and their families (for further infor-   The KPI system allows the analysis of the sustain-
mation, see § Human Resources/People Caring).             ability performance and the ability of the company
                                                          to respond to relevant issues, in addition to the
Telecom Italia is in second place in Italy for web        periodic monitoring of the degree of attainment of
communication on sustainability in the Lundquist          the goals identi ed. Thanks to the CPM system,
classi cation (for further information, see § The         a dedicated application, the management of the
Community/Traditional media).                             sustainability KPI is analogous to that for nancial
By virtue of the experience gained through the co-
leadership of the laboratory “Sustainability and          With the integration of the sustainability data within
evaluation of the non- nancial performance”, started      the Group’s Annual Report, which has been car-
within the Alliance launched by the European Com-         ried out since the nancial year 2003, the Group
mission in March, 2006, Telecom Italia was the only       anticipated the application of European Directive
                51/2003, adopted in Italy under the Decree Law of        schematic form in the “materiality matrix” shown
                February 2nd, 2007, no. 32. The subsidiary com-          below. The relevant issues are identi ed on the ba-
                panies included in the consolidated area are taken       sis of the expectations of the stakeholders and their
                into consideration, unless otherwise indicated (see      in uence on the Group.
                § The Environment and § The Community), exclud-             The process of determining relevance is in
                ing discontinued operations/non-current assets held      line with the Hot Topics of sustainability identi ed
                for sale.                                                through the analysis of the requests of the rating
                                                                         agencies and investors, including benchmarking with
                The Sustainability Report of this nancial year           competitors (see § Hot Topics).
                adopts the principles of the AA1000 AccountAbility          A methodology is being developed for the man-
                Principles Standard (APS) shown below:                   agement of risk within the framework of the best
                      inclusivity: identi cation of the stakeholders     practice of the “Enterprise Risk Management Frame-
                      and their expectations, and the development        work”, under which social and environmental risks,
                      of strategies of involvement aimed at improv-      and those arising from possible con icts between
                      ing the company’s sustainability performance;      stakeholders in general, will be taken more into ac-
                      materiality: identi cation of the important is-    count (for further details, see § Shareholders/Risk
                      sues for the Company and its stakeholders;         Management).
                      responsiveness: a description of the initiatives
                      carried out by the Company to meet the expec-      The methodology followed in measuring the invest-
                      tations of the stakeholders.                       ments in the Community is that de ned by the
                   In order to determine relevance, the Group has        London Benchmarking Group – LBG – (see § The
                developed a process in which results are put into        Community).


 and planning
The following table gives indications of the chap-                The Content Index regarding the GRI is available on
ters/paragraphs and pages which make direct or                    the Internet site www.telecomitalia.it/Corporate/
indirect reference to the principles of the Global                Sustainability.
Compact and the respective GRI indicators.

 GLOBAL COMPACT (GC)                      GRI INDICATORS              CHAPTERS/PARAGRAPHS                 PAGE NUMBER
 PRINCIPLES                               WITH REFERENCE TO           REFERRING TO GC
                                          THE GC                      PRINCIPLES

 1.   Businesses should support           HR1-7, LA4, LA7-9,          Reference and Governance,           8, 9, 13, 23,
      and respect the protection          LA13, PR1, PR8              Codes, Charters and Values, Re-     45, 79, 96
      of internationally proclaimed                                   porting and Planning, Stakeholder
      human rights in the areas of                                    Involvement, Suppliers, The Com-
      the respective spheres of in u-                                 munity, Human Resources

 2.   Businesses should make sure         HR1-7                       References and Governance,          8, 9, 45, 96
      they are not complicit, even                                    Codes, Charters and Values, Sup-
      indirectly, in human rights                                     pliers, Human Resources

 3.   Businesses should uphold            HR1-3, HR5, LA4-5           Codes, Charters and Values, Re-     9, 13, 23, 96
      the freedom of association of                                   porting and Planning, Stakeholder
      workers and the effective recog-                                Involvement, Human Resources
      nition of the right to collective

 4.   Businesses should uphold            HR1-3, HR7                  Codes, Charters and Values, Sup-    9, 45, 96
      the elimination of all forms of                                 pliers, Human Resources
      forced and compulsory labour                                                                                                15

 5.   Businesses should uphold            HR1-3, HR6                  Codes, Charters and Values, Sup-    9, 45, 96         INTRODUCTION
      the effective abolition of child                                pliers, Human Resources
                                                                                                                             reporting and
 6.   Businesses should uphold the        HR1-4, LA2, LA13            Codes, Charters and Values,         9, 23, 45, 96
      elimination of discrimination                                   Stakeholder Involvement, Suppli-                         planning
      in respect of employment and                                    ers, Human Resources

 7.   Businesses should support           EC2, EN18, EN26, EN30       Hot Topics, Reporting and           10, 13, 17, 20,
      a precautionary approach to                                     Planning, 2009 Objectives and       23, 59
      environmental challenges.                                       Results, Objectives 2010, Stake-
                                                                      holder Involvement, Suppliers,
                                                                      The Environment

 8.   Business should undertake           EN1-5, EN8, EN16,           2009 Objectives and Results,        17, 20, 23,
      initiatives to promote greater      EN17, EN20, EN22,           Objectives 2010, Stakeholder        45, 59
      environmental responsibility.       EN23, EN26-27, EN30,        Involvement, Suppliers, The
                                          PR3                         Environment

 9.   Businesses should encourage         EN5-7, EN18, EN26-27,       Hot Topics, Reporting and           10, 13, 59, 79
      the development and diffusion       EN30                        Planning, The Environment, The
      of environmentally friendly                                     Community

 10. Businesses should work               SO2-4                       References and Governance,          8, 9, 45, 116
     against corruption in all its                                    Codes, Charters and Values, Sup-
     forms, including extortion and                                   pliers, Shareholders
                Planning                                                       An important element used by the Group on matters
                                                                               of sustainability is the Assessment Schedule. All
                The Sustainability Plan is based on a procedure that           projects which involve signi cant investment, and
                is broken down into four phases:                               which are put forward for the approval of appropriate
                 1. identi cation of the areas for improvement in              Committees, are covered by this schedule. Its func-
                     sustainability performance;                               tion is to illustrate the impact, in terms of sustaina-
                 2. comparison between the areas for improve-                  bility, of the investment. Each project manager must
                     ment and the projects the Group plans to carry            indicate the impact, positive, neutral or negative, of
                     out for the purposes of its business;                     the project to be approved in the important areas
                 3. de nition of targeted management actions to                identi ed for each stakeholder.
                     be taken in the areas for improvement where no                These reports are taken into account within the
                     projects have been conducted previously, or those         decision-making process that leads to the approval
                     where the planned projects have not had suf -             of investments, and they provide a useful summary
                     cient, positive impact in terms of sustainability;        for assessing the overall impact of the Group’s in-
                 4. monitoring those areas in need of supervision in           vestment choices in terms of sustainability.
                     order to maintain the performance level attained.




                                                                    general issues for
   reporting                                                         admission to the
 and planning                                                         sustainability

                                                                                                            requests of the
                           commitments required                                                              stakeholders
                             by international                                                            (conveyed through the
                              organisations                                                               associations, media,
                                                                                                            direct contacts)

                                                                 areas for improvement

                                     Commitments required by
                                         regulatory bodies,                                       benchmarking with peers
                                    expressed within the Group
                                     in the Code of Ethics and
                                      the other charters and
                                          policies adopted

The results attained regarding the objectives pub-
lished in the Report on Sustainability 2008 are re-
ported below.


                                                                              UNIT OF                               FINAL        TARGET
     AREA OF                                                                                     TARGET
                              INDICATOR                                       MEASURE-                             RESULT        STATUS
     REFERENCE                                                                                     2009
                                                                              MENT                                   2009         2009

     The Community            Telecom Italia Foundation – Financial           %                     0.05               0.05
                              commitment envisaged with respect to
                              the Group’s EBITDA

     Human Resources –        Training in health and safety issues            Training           90,000            94,437
     Training                                                                 hours

     Human Resources –        Training – Italian companies(1)                 Training                 33              30.7
     Training                                                                 hours per

     Human Resources –        Training – Italian companies(1) coverage        %                     71.5               80.1
     Training                 (percentage of employees from the total
                              workforce who have taken part in at
                              least one training intervention)

     The Environment –        Eco-ef ciency indicator(3)                      Bit/Joule            1,410             1,317
     Eco-ef ciency

     The Environment –        SAR quali cation(4)                             %                      100               100
     Electromagnetism                                                                                                                                  17

     The Environment –        Number of cells of the UMTS Radio               Number of            2,500             3,202
     Electromagnetism         Stations on which a second carrier has          cells
                              been installed (5)
                                                                                                                                                 2009 objectives
     The Environment –        FSC certi ed paper procured for of ce           %                        90              100
                                                                                                                                                   and results
     Natural Resources        use (6)

     The Environment –        Used paper sent for recycling                   Tons               13,540            21,263
     Natural Resources

     The Environment –        Reduction of CO2 emissions deriving             Tons                   200               214
     Atmospheric impact       from the replacement of diesel- red
                              heating systems with plants having less

     The Environment –        Reduction of the quantity of ozone-             kg                   6,400             8,151
     Atmospheric impact       harmful gas used in air-conditioning
                              plants and cooling systems

     The Environment –        Reduction of CO2 emissions deriving             Tons                 1,630             2,169
     Atmospheric impact       from the replacement of Euro3 vehicles
                              with Euro4 vehicles(8)

     Digital Inclusion        ADSL coverage(9)                                %                     96.5               96.5

     Digital Inclusion        IPTV coverage(9)                                %                     54.8               57.6

     Digital Inclusion        UMTS and HSDPA coverage(10)                     %                     82.4               83.3

Target:      reached
             not reached

1. The data includes all the Group’s companies in Italy.                 6.  Measured against the total amount of paper procured for of ce
2. The data includes classroom, on line and on the job training.             use. FSC = Forest Stewardship Council.
3. For more information on the eco-ef ciency indicator, please refer     7.  Most of the new plants are fuelled with gas.
   to The Environment/Climate change.                                    8.  A reduction of around 30% in CO2 emissions is achieved with
4. This is the percentage of mobile phones subject to the SAR (Spe-          the Euro4 vehicles compared to Euro3 vehicles. The target was
   ci c Absorption Rate) quali cation. The percentage is calculated          calculated by considering the emissions of the models of vehicles
   on the most widespread and technologically innovative models of           effectively replaced.
   mobile handsets.                                                      9. The percentage refers to xed telephone lines.
5. Under high traf c conditions, by using two radio frequency carriers   10. The percentage refers to the residential population.
   instead of one, the total power emitted by the station is less.
                  TELECOM ITALIA S.P.A. – CUSTOMERS

                                                                                                         UNIT OF
                       AREA OF                                                                                        TARGET   FINAL RESULT
                                              INDICATOR(1)                                               MEASURE-
                       REFERENCE                                                                                        2009         2009(2)

                       Customers –            Activation time for voice service – Pre-paid service       %               97               –
                       Mobile                 – Percentage of valid orders completed within the
                                              maximum period laid down in the contract

                       Customers –            Activation time for voice service – Post-paid service      %               97               –
                       Mobile                 – Percentage of valid orders completed within the
                                              maximum period laid down in the contract

                       Customers –            Customer assistance services – Average response            Seconds         40               –
                       Mobile                 time of the operator to incoming calls

                       Customers –            Disputed charges – Ratio between the number of             %               1.8              –
                       Mobile                 disputed charges in invoices received during the survey
                                              period and the number of invoices issued in the same
                                              period (post-paid service)

                       Customers –            Disputed charges – Ratio between the number of             %                5               –
                       Mobile                 disputed charges on pre-paid cards within the survey
                                              period and the average number of active SIM/USIM in
                                              the same period (pre-paid service)

                       Customers –            Activation time for services of broadband access –         %               90               –
                       Internet               Percentage of valid orders completed within the date
                                              agreed with the customer (active telephone lines)

                       Customers –            Activation time for services of broadband access –         Days            11               –
                       Internet               Average time of supply (active telephone lines)

                       Customers –            Broadband internet access service faults – Average         Hours           34               –
                       Internet               repair time

INTRODUCTION           Customers –            Customer assistance services – Average response            Seconds        105               –
                       Internet               time of the operator to incoming calls

                       Customers –            Disputed charges – Ratio between the number of dis-        %               1.5              –
2009 objectives        Internet               puted charges in invoices regarding all Internet access
  and results                                 services (received during the survey period) and the
                                              total number of invoices issued in the same period

                       Customers – IPTV       Activation time of the IPTV service – Percentage of        %               78               –
                                              valid orders completed within the date agreed with the

                       Customers – IPTV       Customer assistance response time – Average time of        Seconds        105               –
                                              operator response to incoming calls

                       Customers – IPTV       Disputed charges – Ratio between the number of             %               1.6              –
                                              disputed charges in invoices regarding the IPTV service
                                              (received during the survey period) and the total
                                              number of invoices containing charges regarding this
                                              service (issued during the same survey period)

                       Customers – IPTV       Availability of IPTV service – Average unavailability of   Hours/Year      50               –
                                              the service

                  1. The complete list of the quality targets of Telecom Italia for 2009
                     is available on the Group’s Internet site.
                  2. The nal results for 2009 will be published in July, 2010, on the
                     Group’s Internet site.

     AREA OF                INDICATOR                                      UNIT OF        TARGET          FINAL   TARGET
     REFERENCE                                                             MEASURE-         2009    RESULT 2009   STATUS
                                                                           MENT                                    2009

     Human Resources        Satisfaction of employees measured             Average            7.5             -     (2)

                            through the questionnaire “TI Group            level of
                            Photo”(1)                                      satisfaction

     Human Resources        Reduction in turn-over of employees            % (monthly)        2.2           2.5

     Human Resources        Reduction in absenteeism                       %                  3.2           4.3

     Human Resources        Training (total n° of hours: in class +        Hours of       715,000       456,606
                            on line + on the job)                          training

     Human Resources        Training – Coverage (percentage of             %                 95.2           98
                            managers out of the total eligible who
                            have taken part in at least one training

     Human Resources        Training – sustainability (n° of manag-        %                  47            73
                            ers out of the total eligible who have
                            taken part in at least one training
                            session on sustainability issues)

     The Environment        Reduction of the total of paper pro-           %                  2.1           11
                            cured (of ce use only)

     The Environment        Ratio between recycled waste and the           %                  43            49
                            total waste generated in the of ces

     The Environment        Mobile phones, batteries and accesso-          Tons               11            18
                            ries collected and sent for recycling
     The Environment        SAR quali cation Brazil(3)                     %                  25            25
     Suppliers              Percentage of the main suppliers as-           %                  30            90
                            sessed under sustainability criteria
                                                                                                                           2009 objectives
                                                                                                                             and results

Target:     reached
            not reached

1. The data is calculated on a scale of 1 to 10.
2. The TI Group Photo questionnaire was not carried out in 2009.
   The survey will take place in the rst months of 2010 and the -
   nal results will be included in the respective Sustainability Report.
3. This is the percentage of mobile phones subject to the SAR (Spe-
   ci c Absorption Rate) quali cation. The percentage is calculated
   on the most widespread and technologically innovative models of
   mobile phone handsets.
                  The sustainability objectives de ned by the Group                          The targets of a qualitative nature for suppliers are
                  for 2010 are given below.                                                  included in the respective chapter.

                  TELECOM ITALIA S.P.A.

                       AREA OF                      INDICATOR                                                     UNIT OF                  FINAL        TARGET
                       REFERENCE                                                                                  MEASUREMENT             RESULT          2010

                       The Community                Telecom Italia Foundation – Financial commit-                 %                           0.05          0.05
                                                    ment provided with respect to the Group’s EBITDA

                       Human Resources –            Training in Health, Safety and Environment                    Training hours           94,437        95,000
                       Training                     issues(1)

                       Human Resources –            Training – Italian companies(2)                               Training hours              30.7             33
                       Training                                                                                   per head(3)

                       Human Resources –            Training – Italian companies coverage (n° of                  %                           80.1             80
                       Training                     employees from the entire population who have
                                                    taken part in at least one training session)

                       Human Resources –            Accidents per 100 workers                                     Number                      1.97         <1.97

                       Human Resources –            Reduction in the index of severity(4)                         Number                      0.42         <0.42

                       The Environment              Eco-ef ciency indicator(5)                                    bit/Joule                 1,317          1,410
      20               –Energy
INTRODUCTION           The Environment –            Self production of electrical energy from renew-              kWh                    200,000        500,000
                       Energy                       able sources

2010 objectives        The Environment –            Total electrical energy procured or produced                  GWh                       2,136          2,136

                       The Environment –            Number of fuel cell plants in replacement of lead             Number                       100             80
                       Energy                       batteries(6)

                       The Environment –            Reduction of the quantity of ozone-harmful                    kg                        8,151          5,970
                       Atmospheric emissions        gas used in air-conditioning plants and cooling

                       The Environment –            Reduction of CO2 emissions deriving from the                  Tons                      2,169          1,660
                       Atmospheric emissions        replacement of Euro3 vehicles with Euro4

                       The Environment –            FSC certi ed paper procured for of ce use(8)                  %                            100           100

                       The Environment –            Used paper sent for recycling                                 Tons                     21,263        20,000

                       The Environment              SAR quali cation(9)                                           %                            100           100
                       – Electromagnetic

                       Digital Inclusion            ADSL coverage(10)                                             %                           96.5          97.2

                       Digital Inclusion            IPTV coverage(10)                                             %                           57.6          59.3

                       Digital Inclusion            UMTS and HSDPA coverage(11)                                   %                           83.3          84.3

                  1. Training delivered directly by SPPA (Prevention, Protection and         7.    A reduction of around 30% in CO2 emissions is achieved with
                     Environment Services).                                                        Euro4 vehicles compared to Euro3 vehicles. The target has been
                  2. The data includes all the companies of the Group in Italy.                    calculated considering the emissions of the models that have
                  3. The data includes training in class, on line and on the job.                  been effectively replaced.
                  4. The severity index shows the working days lost during the year for      8.    Measured against the total paper procured for of ce use. FSC =
                     every thousand hours worked.                                                  Forest Stewardship Council.
                  5. For further information on the eco-ef ciency indicator, please see      9.    This is the percentage of mobile phones subject to the SAR (Spe-
                     The Environment/Energy.                                                       ci c Absorption Rate) quali cation. The percentage is calculated
                  6. The introduction of an additional 80 plants, laid down as a 2010              on the most widespread and technologically innovative models of
                     target, avoids the use (and subsequent disposal) of 240 tons of               mobile phone handsets.
                     lead. An assessment of the total life cycle shows a bene t in CO2 not   10.   The percentage refers to xed telephone lines.
                     emitted equal to around 100 tons, compared to traditional batteries.    11.   The percentage refers to the residential population.

     AREA OF                  INDICATOR(1)                                                           UNIT OF       TARGET
     REFERENCE                                                                                       MEASUREMENT     2010

     Customers –              Activation time for voice service – Pre-paid Service – Percentage of   %                97
     Mobile                   valid orders completed within the maximum period laid down in the

     Customers –              Activation time for voice service – Post-paid Service – Percentage     %                97
     Mobile                   of valid orders completed within the maximum period laid down in
                              the contract

     Customers –              Customer assistance services – Average response time of the            Seconds          40
     Mobile                   operator to incoming calls

     Customers –              Disputed charges – Ratio between the number of disputed charges        %                1.6
     Mobile                   in invoices received within the survey period and the number of
                              invoices issued in the same period (post-paid service)

     Customers –              Disputed charges – Ratio between the number of disputed charges        %                1.3
     Mobile                   on pre-paid cards within the survey period and the average number
                              of active SIM/USIM in the same period (pre-paid service)

     Customers –              Activation time for services of broadband access – Percentage of       %                92
     Internet                 valid orders completed within the date agreed with the customer
                              (active telephone lines)

     Customers –              Activation time for services of broadband access – Average time of     Days             10
     Internet                 supply (active telephone lines)

     Customers –              Broadband internet access service faults – Average repair time         Hours            32

     Customers –              Customer assistance services – Average response time of the            Seconds          78
     Internet                 operator to incoming calls                                                                          21

     Customers –              Disputed charges – Ratio between the number of disputed charges        %                1.4   INTRODUCTION
     Internet                 in invoices regarding all Internet access services (received during
                              the survey period) and the total number of invoices issued in the
                              same period                                                                                   2010 objectives
     Customers – IPTV         Activation time of the IPTV service – Percentage of valid orders       %                78
                              completed within the date agreed with the customer

     Customers – IPTV         Customer assistance response time – Average time of operator           Seconds          80
                              response to incoming calls

     Customers – IPTV         Disputed charges – Ratio between the number of disputed charges        %                1.4
                              in invoices regarding the IPTV service (received during the survey
                              period) and the total number of invoices containing charges regard-
                              ing this service (issued during the same survey period)

     Customers – IPTV         Availability of IPTV service – Average unavailability of the service   Hours/Year       40

1.    The complete list of the quality objectives that Telecom Italia has
      set out for 2010 is available on the Group’s Internet site, where
      the respective nal totals will be published for 2009.
                           TIM BRASIL

                                AREA OF              INDICATOR                                                  UNIT OF                       FINAL          TARGET
                                REFERENCE                                                                       MEASUREMENT                  RESULT            2010

                                Human Resources      Voluntary service work (percentage of employees            %                                 – (1)           1
                                                     who bene t from at least 1 day’s leave in lieu for
                                                     taking part in voluntary activities)

                                Human Resources      Training (total n° of hours: in class + on line + on       Hours of training           456,606          715,000
                                                     the job)

                                Human Resources      Training – Coverage (percentage of employees out           %                                  98            97
                                                     of the total workforce who have taken part in at
                                                     least one training session)

                                Human Resources      Training – sustainability (n° of employees out of the      %                                 –   (2)
                                                     total workforce who have taken part in at least one
                                                     training session on sustainability issues)

                                The Environment      Ratio between recycled waste and the total waste           %                                  49            51
                                                     generated in the of ces

                                The Environment      Reduction of electricity consumption in the of ces         GWh                                   (3)

                                The Environment      Reduction of water consumption in the of ces               m   3                                 (4)

                                The Environment      Mobile phones, batteries and accessories collected         Tons                               18            12
                                                     and sent for recycling

                                The Environment      SAR quali cation Brazil(5)                                 %                                  25            25

                                Suppliers            Number of the main suppliers assessed under                no.                                     29         70
                                                     sustainability criteria



the group sustainability
                           1. In 2009, acknowledgement for days paid to employees for volun-      4. In 2009, the objective of a reduction in water consumption
                              tary service work was not provided.                                    was not provided. The reduction target for 2010 of 2,400 m3
                           2. In 2009, the objective “Training – sustainability” only concerned      comes from the difference between 2009 consumption, equal to
                              managers.                                                              173,000 m3, and that expected for 2010, equal to 170,600 m3.
                           3. In 2009, the objective of a reduction in the consumption of         5. This is the percentage of mobile phones subject to the SAR (Spe-
                              electrical energy was not provided. The reduction target for 2010      ci c Absorption Rate) quali cation. The percentage is calculated
                              of 1 GWh comes from the difference between 2009 consumption,           on the most widespread and technologically innovative models of
                              equal to 73 GWh, and that expected for 2010, equal to around 72        mobile phone handsets.

                                                                                                         ensuring the reporting to the outside of the ac-
                                                                                                         tivities of sustainability carried out;
                           Mission and structure                                                         managing the relations with the specialised
                           The management of sustainability in Telecom Italia                            rating agencies;
                           is ensured by the Group Sustainability department                             representing the Group in the national and
                           which carries out the following activities:                                   international forums which are active on the
                                    promoting projects and initiatives at Group                          issue.
                                    level with environmental and social impact,
                                    collaborating with the company departments                    From 2009, the department was passed to the Ex-
                                    which have operational responsibility for them;               ternal Relations Department to ensure a more struc-
                                    contributing to the dissemination of a correct                tured communication of the initiatives undertaken
                                    approach to sustainability within the company,                and the results achieved.
                                    under the perspective of continuous improve-                       The organisational structure is shown below.

                                          CHIEF EXECUTIVE                  COMMITTEE FOR INTERNAL CONTROL
                                              OFFICER                        AND CORPORATE GOVERNANCE

                                        EXTERNAL RELATIONS
                                           DEPARTMENT                          supervision through checks on sustainability
                                                                               activities in general, including projects
                                                                               conducted by the telecom italia foundation

                                       GROUP SUSTAINABILITY

          REPORTING                           PLANNING                        RELATIONS WITH
                                                                              RATING AGENCIES

   In each department, sustainability data owners are responsible for monitoring the
   activities and gathering data and information for sustainability reporting and
   questionnaires from rating agencies.


The guidelines                                                       con rmation of the international commitments             INTRODUCTION
The management of sustainability within the Telecom                  on matters of sustainability, including adher-
Italia Group is based on the following guidelines:                   ence to the Global Compact;                                stakeholder
     inclusion of a summary of the sustainability                    contribution to projects and initiatives on a na-          involvement
     data within the Financial Statement, in con r-                  tional and international basis, developed also
     mation of the Group’s determination to present                  within the sector organisations (see § Com-
     its nancial performance jointly with non- nan-                  petitors/Relations with the stakeholders and §
     cial information;                                               The Environment/Environmental performance);
     evaluation of the impact in terms of sustain-                   adherence to the main international stand-
     ability of the business projects presented for                  ards on matters of sustainability (see § Ref-
     approval by the Group’s Investment Commit-                      erences and Governance and § Reporting and
     tee, through the compilation by the proposing                   Planning);
     project manager of the investments schedule                     continuous improvement of its own perform-
     (see § Reporting and Planning);                                 ance, including through benchmarking with
     collaboration with the stakeholders through                     peers;
     projects and initiatives at various levels (see §               detailed communication to the stakeholders of
     Stakeholder Involvement);                                       the activities carried out.
     the de nition of quantitative objectives in line
     with the most important issues of sustainabil-
     ity (see § Strategy/2010 Objectives);
     integration of sustainability and innovation:
     a speci c section is dedicated to issues of               The involvement of the stakeholders in the company
     business responsibility within the technologi-            processes takes place through a series of initia-
     cal plan, the document in which the company               tives, classi ed in accordance with the guidelines
     de nes its strategy in terms of the evolution of          recommended by AccountAbility 1000 (see § Report-
     the transmission network;                                 ing and Planning).

                             INFORMATION                        CONSULTATION                            DIALOGUE                              PARTNERSHIP

                             Noti cation to the customers of    Customer satisfaction is surveyed       Collaboration with the consumer       Participation in national and
                             offers and conditions through      systematically (Customers/Cus-          associations                          international work groups, in
                             various methods (Customers/        tomer Satisfaction)                     (Customers/Relations with con-        partnership with UN agencies,
                             Communication to customers)                                                sumer associations)                   non-governmental organisations,
                                                                                                                                              and organisations in the sector,
                                                                                                                                              on the issue of protecting minors

                                                                                                                                              from potential abuses carried out
                                                                                                                                              through the Internet (Customers/
                                                                                                                                              Protection of minors)

                             Information on the rules for the                                           Use of web instruments based on       Partnership projects with other
                             safe use of the Internet and for                                           the social networks to conduct        agencies for the testing and
                             combatting abuses through the                                              a dialogue with the call centre       creation of innovative assistance
                             Internet (Customers/Protection                                             operators (Customers/The involve-     services (Customers/Digital
                             of the minors)                                                             ment of the call centre operators)    Divide – Customers/Innovative

                             Seminar on the Green Economy       Third survey of satisfaction with       Updating the check list on sup-       E-community of the main sup-

                             (Suppliers/Principal initiatives   the Purchasing Management, and          pliers for the CSR assessment         pliers through the “TelecHome,”
                             of involvement)                    more generally with TI, conducted       (Suppliers/Main initiatives of        accessible through the Suppliers’
                                                                with the Group’s main suppliers         involvement)                          Portal (Suppliers/Main initiatives
                                                                (Suppliers/Main initiatives of                                                of involvement)

                                                                Periodic qualitative-quantitative re-   Dialogue with the OLO on commer-
                                                                searches to analyse the strength        cial issues and those regarding
                                                                of the Telecom Italia and TIM           the implementation of the Com-
                                                                brands, the image of the provid-        mitments
                                                                ers of Tlc services and mobile          (Competitors/Services to the
                                                                telephony, the reputation of the        OLO – Competitors/Commitments
                                                                providers. (Competitors/Competi-        regarding the access network)
                                                                tive positioning compared to the


                                                                                                        Constant dialogue with the
                                                                                                        Authorities (Competitors/AGCOM
                                                                                                        and competitors/AGCM)

                                                                                                        The Group subscribes to
                                                                                                        numerous national and trade
                                                                                                        federations/associations and
                                                                                                        organisations at the national and
                                                                                                        international levels (Competitors/
                                                                                                        Relations with the stakeholders)

                                                                Participation in the workshops          Control of the process of abuse       Telecom Italia participates in
                                                                organised by the Enterprise and         management by a key, in-house g-      the work group on human rights
                                                                Industry DG of the European Com-        ure with the Postal Police (NNCPO,    of the Global Compact and
                                                                mission on the issue of communi-        National Centre for Combatting        supports the GC Italian Network
                                                                cation and sustainability reporting     Child Pornography, CNAIPIC, etc.)     (Institutions / Relations with the
                                                                (Introduction/Other acknowledge-        and the competent Authorities         stakeholders)
                                                                ments)                                  (Customers/Protection of minors)

                                                                                                        Dialogue with national and supra-     Numerous initiatives regarding
                                                                                                        national Institutions on business     the Community carried out in
                                                                                                        issues of relevance to the Group      partnership with the Institutions
                                                                                                        (Institutions/Relations with the      (The Community/Our responses

                                                                                                        stakeholders)                         to the stakeholders)

                                                                                                        “Digital Divide Day” workshop         Agreement with the State Police
                                                                                                         organised within TI with the         to improve the prevention and
                                                                                                         participation of the Marche Region   suppression of crimes against
                                                                                                         and the Autonomous Province of       the critical digital systems of the
                                                                                                        Trento                                company
                                                                                                         (Customers/Digital Divide)           (Customers/Research and in-
                                                                                                                                              novation in e-security)

                                                                                                                                              Collaboration with the Postal Po-
                                                                                                                                              lice for the suppression of abuses
                                                                                                                                              carried out through the transmis-
                                                                                                                                              sion networks of the Group
                                                                                                                                              (Customers/Protection of minors)
                                INFORMATION                             CONSULTATION                        DIALOGUE                                 PARTNERSHIP

                                “Carbon Meter” available on AVoi-                                           Collaboration with other European        Co-siting agreements with
                                 Comunicare                                                                 Tlc operators on issues of environ-      the other Italian Tlc opera-
                                 (The Environment/Information)                                              mental relevance within the ambit        tors
                                                                                                            of the associations of the sector,       (The Environment/Energy)
                                                                                                            including GeSI and ETNO
                                                                                                            (The Environment/Climate change)

                                The Group’s television broadcast-                                           Contributions to the Working Groups
                                ers give ample visibility to environ-                                       promoted by the EU and ETNO in
                                mental issues                                                               de ning the Code of Conduct on
                                (The Community/Traditional media)                                           broadband equipment and the data
                                                                                                            centres (The Environment/Energy)

                                Internal communications on social                                           The integrated communication
                                and environmental issues                                                    project AVoiComunicare encourages
                                (The Environment/Training and                                               discussion on environmental issues
                                Internal communication – Human                                              (The Community/The Social Media
                                Resources – Internal communica-                                             and Digital Communication)

                                The Group’s television broadcast-                                           Working Capital was established          Numerous projects carried
                                ers ensure wide visibility to social                                        to support Italian innovation and        out in partnership with non-
                                issues                                                                      entrepreneurial initiatives in the eld   governmental organisations
                                (The Community/Traditional Media)                                           of web 2.0                               and civil society
                                                                                                            (The Community/The Social Media          (The Community/Our
                                                                                                            and Digital Communication)               responses to the stakehold-
              THE COMMUNITY

                                                                                                            The integrated communication
                                                                                                            project AVoiComunicare encourages
                                                                                                            discussion on environmental issues
                                                                                                            (The Community/The Social Media
                                                                                                            and Digital Communication)

                                The Group’s Internet site gives wide                                        Venice Sessions is a platform for
                                visibility to social issues (The Com-                                       dialogue which involves stakehold-
                                munity/Traditional Media)                                                   ers of innovation on the national
                                                                                                            and global scale
                                                                                                            (The Community/The Social Media
                                                                                                            and Digital Communication)

                                Internal communication activities       “The Lighthouse” project            Electronic mailboxes, Intranet,
                                (Human Resources /Internal com-          (Human Resources/Listening         blogs, virtual communities, climate
                                munication)                              projects and activities)           analysis (Human Resources/Internal
              HUMAN RESOURCES

                                Courses on health and safety            “Archimede” project                 Activation of a number of focus
                                matters                                  (Human Resources/Listening         groups on the issues of disability
                                (Human resources/Protection of           projects and activities)           and human diversity
                                health and safety)                                                          (Human Resources/People Caring)

                                                                        “Wellbeing in the call centres”
                                                                         project (Human Resources/Protec-
                                                                         tion of health and safety)

                                The shareholders’ club, “TI Alw@        Direct meetings and daily tel-      Three monthly conference calls,
                                ys ON” (www.telecomitaliaclub.it)       ephone conversations (Sharehold-    meetings at institutional of ces
                                supplies important information to       ers/Financial communications)       of the Group (reverse road shows),
                                individual investors and the general                                        participation in sector conferences,
                                public                                                                      making a total of around 300 inves-
                                (Shareholders/Financial com-                                                tors meetings (Shareholders/Finan-
                                munication)                                                                 cial communication)

                                The Individual Shareholder’s Guide                                          Road shows abroad, also includ-
                                is an in-depth document available                                           ing one speci cally dedicated to
                                on the website                                                              sustainability issues (Shareholders/
                                (Shareholders/Financial com-                                                Financial communication)

                                On line nancial communication
                                (Shareholders/Financial com-
                                                                                                       Some of Telecom Italia Group’s main economic, as-
                                                                                                       sets and nancial data are reported below as well
                                                                                                       as the economic value generated and distributed to
                            The business must be oriented towards the pursuit                          stakeholders. In the following table, data regarding
                            of nancial results without losing sight of the envi-                       the previous nancial year have been restated as re-
                            ronmental and social context in which it operates.                         ported in Note 3 of the TI Group Annual Report, and
                                                                                                       have been recalculated for purposes of comparison.
                            According to the triple bottom line approach , con-         (2)

                            cern over the environmental and social variables                           Since 2008, the method of presentation recom-
                            must not detract from the attention paid to the                            mended by the Global Reporting Initiative (GRI) has
                            economic- nancial performance of a company, which                          been adopted, with appropriate adaptation.
                            must ensure balance and its own medium to long
                            term survival.

                            TELECOM ITALIA GROUP – MAIN CONSOLIDATED                                   TELECOM ITALIA GROUP – ADDED VALUE GENER-
                            ECONOMIC, ASSETS AND FINANCIAL DATA                                        ATED AND DISTRIBUTED (MILLION EUROS)
                            (MILLION EUROS)

                                                                         2009                 2008                                       2009         2008

                              Revenues                                 27,163            29,000         Direct economic
                                                                                                        value generated
                              EBITDA                                   11,115            11,090
                                                                                                           a) Revenues and other        27,445      29,336
                              EBIT                                      5,493                 5,437           income
                              Net pro t for the year                    1,596                 2,178        b) Interest payable and        104          345
                                                                                                              dividends paid
                              Total net equity                         27,120            26,328
                                                                                                           c) Capital grains (capital     (59)          35
                                    attributable to the                25,952            25,598
    economic value                                                                                            losses) from dispos-
                                    equity holders of the
                                                                                                              als on non-current
generated and distributed           Parent
                                    attributable to the                 1,168                  730         d) Direct economic           27,490      29,716
                                    Minority interest                                                         value generated
                              Net nancial debt                         34,747            34,039

                              Investments:                                                              Economic value
                                    Industrial                          4,543                 5,040
                                                                                                           e) Operating costs           12,200      13,713
                                    Financial                                 6                  6
                                                                                                           f) Employee costs             3,734       4,114
                              Headcount at year-end                    71,384            75,320
                                                                                                           g) Shareholders and pro-      3,183       3,999
                                                                                                              viders of capital

                                                                                                           h) Taxes and duties           1,548       2,138

                                                                                                           i) Economic value dis-       20,665      23,964
                                                                                                              tributed (e+f+g+h)

                                                                                                        Economic value retained          6,825       5,752

                            (2)   This approach was de ned for the rst time by John Elkington in
                                  1994 in the article “Towards the sustainable corporation: Win-win-
                                  win business strategies for sustainable development.” California
                                  Management Review 36, no. 2: 90-100.

                               2009         2008                                                  2009              2008

  Acquisition of external     11,480      13,120      Dividends distributed                      1,053             1,667
  goods and services
                                                      Interest payable                           2,130             2,332
  Other operating costs(1)     1,220       1,212
                                                      Shareholders and                           3,183             3,999
  Change in inventories          15         (113)     providers of capital

  Internally generated         (515)        (506)

  Operating costs             12,200      13,713      TAXES AND DUTIES

                                                                                                  2009              2008

                                                      Income taxes                               1,152             1,719
                                                      Indirect taxes and duties                    396                419
                               2009         2008
                                                      Taxes and duties                           1,548             2,138
  Wages and salaries           2,570       2,597
                                                           regarding Italian                     1,232             1,781
  Social security costs         942          944           activities

  Provisions for employees’      54           71           regarding activities                    316                357
  severance and retirement                                 abroad

  Other expenses                168          502
                                                    (1)   Mainly includes write-downs and charges connected to the man-
  Employee costs               3,734       4,114          agement of non- nancial credits for 565 million euros (687 million
                                                          euros in 2008), accruals for risks equal to 164 million euros (70
                                                          million euros in 2008), and contributions and fees for the exercis-
                                                          ing of Tlc activities for 318 million euros (315 million euros in
                                                          2008) net of “Other taxes and duties” for 396 million euros (419
                                                          million euros in 2008) included in the item “Taxes and duties”.


 ECONOMIC VALUE GENERATED AND DISTRIBUTED IN 2009 (MILLION EUROS)                                                                   economic value
                                                                                                                                generated and distributed

   economic value                                                      operating costs
   not distributed

taxes and

        and providers
        of capital

      Focus on costumers.



STAKEHOLDERS   The companies of the Telecom Italia Group base the        To improve the level of care of customers within the

  customers    excellence of their products and services on their        company and attain high levels of customer satisfac-
               care of customers and their willingness to meet           tion, Telecom Italia has adopted a series of formal
               their requirements. The objective sought is to en-        commitments, summarised in the Customer Promise
               sure an immediate, effective response to custom-          published on the Group Intranet.
               ers’ needs, modelling conduct on business propriety,         The Customer Promise, drawn up by listening to
               transparency in dealings and contractual commit-          the views of important stakeholders (customers,
               ments, courtesy and collaboration, the underlying         employees, Institutions), is broken down into:
               viewpoint being that the customer has a central                an all-round provision of high quality and reli-
               role, in full compliance with the principles of conduct        ability;
               which are pursued through appropriate company                  services which improve the quality of life of
               procedures. In such a context, collaboration with              customers and contribute to the development
               Consumer Associations, through the stipulation of              of the country;
               agreements in speci c areas, is highly prized.                 offers and communications in clear, simple
                                                                              and direct language to win and maintain the
                                                                              trust of customers;
                                                                              a company which is not remote but accessi-
                                                                              ble, grounded in human relations, easy to deal
               The relevant stakeholders are:                                 with in resolving any problems connected to
                    the consumer customers (residential), with                the service;
                    particular attention to customers with special            people who listen to and understand the
                    needs (the disabled, the elderly, minors etc.);           needs of the customers, with whom they build
                    business customers and top customers (major               a relationship of partnership.
                    the consumer associations.                           To increase the level of awareness of the Customer
Promise and make its application concrete within the       and www.tim.it. In the event of tariff changes or initia-
organisation, the programme “Expressing quality” has       tives in response to speci c regulations (for example,
been launched. The rst phase of the programme              new services for disabling calls to certain numbers),
involved 2,140 managers of territorial areas/units,        noti cation is published in the appropriate place (“On
and groups who are in contact with customers, in 71        line with you” for those regarding xed network serv-
sessions for a total of around 940 hours of training.      ices and “Telecom Italia for you” for those regarding
The discussions, centred on the Customer Promise,          mobile services), in the main national daily newspa-
covered the operational conduct and concrete ac-           pers and, if time permits, a message is inserted in
tions that can facilitate its application with regard to   the “Telecom News” section of the Telecom Italia bill,
customers. “Expressing quality” is continuing with         or attached to the mobile phone statement, or sent
the involvement of the company’s entire management         via SMS for customers using the prepaid service.
through inter-departmental discussion roundtables,            For completeness of information, as a rule, the
with the participation of special guests.                  tariff schedules, products and services have one or
                                                           more suitably dedicated pages on the website, in
To manage the main projects to improve the quality         which the following are given:
of the service, a speci c committee has been estab-              the description of the service/product/offer;
lished, the Steering Committee of Quality Govern-                the prices;
ance (SCQG), which meets monthly, under the super-               the operational characteristics;
vision of the Chief Executive Of cer, with the aim of:           the contractual conditions.
      directing and supervising the initiatives and
      activities aimed at improving the quality of the     Depending on the commercial importance of the
      processes “end-to-end”;                              service/product/offer, the Company may decide to
      monitoring the results in terms of the quality       give noti cation in a broader, more structured manner,           31

      achieved, and analysing them also in relation        carrying out an appropriate campaign through various           EXTERNAL
      to the quality requirements demanded by the          channels, such as TV, press, radio and Internet, and by     STAKEHOLDERS
      Guarantor Authority, the most important/re-          creating speci c materials for the sales outlets.             customers
      curring complaints by customers and, more
      generally, the feedback coming from all the
      supervising the process of quality certi ca-
      tion and the launch of new products/services         Telecom Italia listens to its customers through a sys-
      offered to the customers – in particular, those      tem that encompasses both an overall assessment
      of greatest impact in terms of image and com-        over time of all contacts with Telecom Italia, and a
      petitive positioning on the market.                  speci c evaluation of the most recent contacts (for
                                                           example, the activation of an ADSL line, a request for
                                                           information or the reporting of a fault). The contribu-
                                                           tions received are used to improve the organisational
                                                           procedures with the aim of supplying a service that is
The general communication about tariff changes, new        ever more responsive to the needs expressed.
offers, new products and services to the customers is         The Customer Satisfaction surveys carried out by
broken down according to the methods shown below.          the company are of two kinds:
   According to the Code of the Electronic Com-                  the “re ective” survey is based on the overall
munications (article 70, paragraph 4), any change                perceptions of the customer and is not con-
in the conditions of the provisions of Telecom Italia            nected to a moment in time when contact was
must be noti ed to the customers 30 days before                  made for some speci c reason. This method
the date the commercial initiative comes into effect.            permits the analysis of the causal relation-
   This noti cation or “news” is published in the ap-            ships that determine the customer’s level of
propriate section devoted to useful information for              satisfaction. On the basis of telephone surveys
customers on the websites www.187.it, www.191.it                 conducted by specialised agencies through
                      a speci c questionnaire, the CSI (Customer                           The data given in the next page table refers to the
                      Satisfaction Index) is calculated. This survey,                      2009 average considered progressive value revealed
                      similar to the one used for the ACSI (American                       by the “reactive” survey for Telecom Italia S.p.A.
                      Customer Satisfaction Index), yields an indica-
                      tor which is stable and has a predictive capac-                      Customer satisfaction within the managerial incen-
                      ity, and that can be used to make comparisons                        tives schemes
                      between sectors and countries. This indicator                        Telecom Italia’s short term management incentives
                      furnishes important suggestions about the                            scheme provides, among the targets for all those with-
                      levers that can be employed to improve the lev-                      in the scheme, one linked to customer satisfaction, in
                      els of customer satisfaction. This type of sur-                      line with the Industrial Plan for the period. This target
                      vey has been extended to cover all categories                        is measured through the Customer Satisfaction index-
                      of customers, consumer and business;                                 es monitored through periodical “re ective” surveys
                      the “reactive” survey is conducted immediately                       (including CSI). In addition, there are further targets on
                      after the speci c event that is the object of the                    parameters of quality measured by “reactive” surveys
                      inquiry (for example a contact with the Call Cen-                    for the front end areas (caring, technological etc.).
                      tre). Those interviewed are asked to express,
                      with the experience of the call still fresh in their                 Customer satisfaction within collective incentives
                      minds, an overall assessment of the service re-                      schemes
                      ceived (overall satisfaction) and an assessment                      Telecom Italia’s collective incentives schemes also
                      of the individual aspects of the experience (for                     envisage an objective linked to customer satisfac-
                      example, the time waiting to speak to an opera-                      tion. In particular, performance-related pay for all
                      tor, courtesy and competence).                                       Telecom Italia resources without a system of indi-
     32                                                                                    vidual incentives incorporates both a total customer
   EXTERNAL    The data below refers to the last three months of the                       satisfaction target, across the whole company, and
STAKEHOLDERS   year and shows the overall CSI of Telecom Italia S.p.A.                     speci c targets for those parts of the organisational

  customers                                                                                structure responsible for customer satisfaction.
                 CUSTOMER SEGMENT                2009                      2008

                 Consumer                        69.86                     68.33           The involvement of the call centre operators
                                                                                           To support and help people who work in customer
                 Business                        63.42                     60.63
                                                                                           care, the Group employs certain web tools based
                 Top Clients                     70.30                     70.74
                                                                                           on the “social networking” concept. These provide
                 Total                           68.60                     67.19
                                                                                           effective assistance both in the rapid dissemination
                                                                                           and sharing of information among personnel and in
               The information contained in the following table                            bringing the customer’s voice within the Company.
               refers to the 2009 average considered progressive                               Campus is an educational social network for the
               value revealed by the “re ective” survey.                                   people who respond to 119 calls (for residential

                 FIXED TELEPHONY                                                             MOBILE TELEPHONY
                 CUSTOMER           SATISFACTION              SATISFACTION                   CUSTOMER          SATISFACTION              SATISFACTION
                 SEGMENT            WITH ACCESS               WITH BILLING(*)                SEGMENT           WITH NETWORK              WITH BILLING(*)
                                    SERVICE(*)                                                                 COVERAGE(*)

                                    2009         2008         2009            2008                             2009          2008        2009          2008

                 Consumer           8.18         7.98         7.27   (1)
                                                                              7.14   (1)     Consumer          8.36          8.34        7.79   (2)

                 Business           7.80         7.59         6.73            6.56           Business          8.15          8.10        6.83(3)       6.97(3)

               (*)  Average satisfaction on a scale of 1-10, where 1 means “not at             the one used in 2008 “Transparency and accuracy of operators
                    all satis ed” and 10 means “completely satis ed”.                          and management of credit /bonus in the bill”. For this reason
               (1) As for the consumer segment – xed telephony, starting from                  data are not comparable.
                    2009 the satisfaction item “Ease of reading the bill” has been         (3) As for business segment – mobile telephony, starting from 2009
                    replacing the one used in 2008 “Transparency and accuracy of               the satisfaction item “Ease of reading the bill” has been replacing
                    info in the bill”. For this reason data are not comparable.                the one used in 2008 “Transparency of the bill”. For this reason
                (2) As for consumer segment – mobile telephony, starting from 2009             data are not comparable.
                    the satisfaction item “Ease of reading the bill” has been replacing

                                                                                                            ABILITY TO UNDER-
                                            OVERALL                          COURTESY AND                   STAND AND SATISFY
                                            SATISFACTION(*)                  KINDNESS(*) (**)               NEEDS AND REQUESTS

                                            2009             2008            2009         2008              2009             2008


 Consumer(1)                                7.19             6.63            8.47         8.34              8.01             7.67
 Business(2)                                6.39             6.07            8.14         8.13              7.47             7.23


 Consumer(3)                                7.81             7.50            8.81         8.74              8.46             8.16

 Business(4)                                6.67             6.49            8.27         8.31              7.49             7.32

(*)  Average satisfaction on a scale of 1-10, where 1 means “not at        complaints (excluding calls regarding faults).
     all satis ed” and 10 means “completely satis ed”.                 (2) Assistance given by the 191 (commercial) service for information
(**) Starting from January, 2009, in the survey questionnaire, the         and commercial and administrative requests, reminders and
     operator item “Courtesy and kindness” replaced “Courtesy” and         complaints (excluding calls regarding faults).
     the operator item “Ability to understand and satisfy needs and    (3) Assistance supplied by the 119 Service for information, changes
     requests” replaced “Competence of operator”.                          and complaints.
(1) Assistance given by the 187 (commercial) service for information   (4) Assistance supplied by the Toll-free Business Number for informa-
     and commercial and administrative requests, reminders and             tion, changes and complaints.

customers) and the Toll-free Number (for business                      better assisting the customer.
customers). The project is characterised by the ex-                           In developing this platform, customer care tel-
tent of customisation that the system allows each                      ephone operators in the various call centres were                            33

participant. Operators manage their own pro le                         consulted. In particular, a new format has been                            EXTERNAL
containing both company and personal information.                      devised for the guides in order to furnish prompt re-                   STAKEHOLDERS
These pro les are linked to and accessible from all                    sponses to customers about all the various types of                       customers
other content produced on the same platform (in fo-                    calls. Consultation about the contents is assisted by
rums, blogs etc.). A personalised virtual training sec-                the use of the latest generation algorithms.
tion has also been set up that allows the individu-                           TUO is not just for consultation: the system also
al’s learning programme to be automatically updated                    offers operators the possibility of entering their own
and checked. The outcome is a snapshot, updated                        suggestions and those of customers. In addition
in real time, of the person’s competence, immediate-                   to containing technical information, the platform al-
ly available both to managers and other colleagues,                    lows operators to converse with colleagues, directly
without passing through an intermediary. Alongside                     or through forums subdivided by subject, and share
the information entered by the operators, a system                     knowledge and solutions in order to create a col-
by “experts” directly chosen from the network, guar-                   laborative social network.
antees ready answers to the various subjects that                             Thanks to suggestions from operators during
can arise in handling customers’ requests.                             2009, three new versions of the portal have been
      Campus can be used both by internal person-                      implemented. Adding together all the visits to all
nel and by workers in outsourcing, creating synergy                    the operative environments, more than 27.5 million
between the two groups thanks to the possibility of                    pages had been visited by the end of the year.
freely exchanging ideas and content.                                          TUO was awarded the prize in the “Virtual Com-
                                                                       munity Projects” category of the “Relations with
TUO (meaning “your”, an acronym for the Italian                        Customers 2010” awards, promoted by Customer
words for Find, Use and Organise) is web-based dig-                    Management Multimedia Competence, an initiative
ital platform supporting operators in the 187 and                      that, since 1997, has brought together companies
191 call centres, the consumer contact administra-                     and organisations concerned with relations with cus-
tive centre and the Toll-Free business mobile num-                     tomers and citizens through multimedia channels.
bers, in selecting the necessary information and
                                                                                            vironmental protection is the basis of the certi cate
                                                                                            UNI EN ISO 14001:2004, health and safety at work
               Those departments of the company that have a sig-                            is certi ed under the provisions of regulation BS
               ni cant impact on the products and services offered                          OHSAS 18001:2007, data security is certi ed under
               and, more generally, on the community, are subject                           ISO 27001:2005, Information Technology servic-
               to certi cation, in order to ensure the adoption of                          es are covered by the certi cate ISO/IEC 20000-
               procedures and conduct in line with the expecta-                             1:2005, and software production and digital solution
               tions of the relevant stakeholders.                                          processes are certi ed under CMMI-DEV (Capability
                     In particular, customer care and the quality of the                    Maturity Model Integration – Development), a new
               products and services offered is recognised by the                           generation standard.
               certi cate UNI EN ISO 9001:2008, concern for en-                                 In the following table, the certi cates obtained

                 COMPANY                         CERTIFICATE                DEPARTMENT

                 Telecom Italia                  ISO 9001                   Departments:
                                                                            Domestic Market Operations
                                                                               Top Client Market & Networked IT Services
                                                                               Customer Operations (regarding the processes for the business
                                                                               Consumer/Sales (Territorial Areas)
                                                                            Technology & Operations
                                                                            Technology & Operations/Open Access(1)
                                                                            Operational units involved in the mobile invoicing process for business
     34                                                                     customers
                                                                            Subsidiary companies: TI Sparkle (retail services), Elettra Tlc, Path.Net,
   EXTERNAL                                                                 Loquendo, Telsy, Shared Service Centre
                                                 ISO 14001                  Departments:
  customers                                                                 Technology & Operations
                                                                            Infrastructure procurement
                                                                            Service Centre Facility
                                                                            Operational units involved in the Rome and Naples call centre process
                                                                            Subsidiary companies: TI Sparkle, Elettra Tlc

                                                 ISO 27001                  Departments:
                                                                            Technology & Operations
                                                                            Domestic Market Operations
                                                                               Top Client Market & Networked IT Services/Project & Service Man-
                                                                               agement (Data Centre and Security Services for the market)

                                                 OHSAS 18001                Departments:
                                                                            Operational units involved in the Rome and Naples call centre process
                                                                            Subsidiary companies: TI Sparkle

                                                 CMMI-DEV                   Shared Service Center

                                                 ISO/IEC 20000-1            Shared Service Center

                 Olivetti                        ISO 9001                   Processes: Business & Market Development, Product & Technology
                                                                            Development, Industrial operations, Market Communication

                                                 ISO 14001                  Olivetti factory in Arnad (Aosta)

                 Tim Brasil                      ISO 9001                   Companies: Tim Brasil s.a. (invoicing processes) and Time Nordests
                                                                            s.a. (network management)

               (1)   The “Open access” structure, within the “Technology &
                     Operations” department (fully certi ed), has achieved its own
                     certi cation (by a different certifying body), also for the purpose
                     of enhancing the independence of Telecom Italia’s processes,
                     consistent with the company’s mission, which provides for equality
                     of treatment of national operators.
by the various departments/companies of the Group        14.4 Mbp/s (megabits per second) to be reached.
for particularly important company procedures and           From the point of view of local investment, co-
activities are listed below. Detailed information is     operation with the regional authorities takes place
available at www.telecomitalia.it (Sustainability/Our    according to two principal means of intervention;
Model/Certi cations).                                    the rst is “contributive” (the so-called “claw back”
   The attainment of the following certi cates is        model), based on direct nancial incentives (in ac-
planned in 2010:                                         cordance with the regulatory framework in matters
      UNI EN ISO 14001:2004 for the Open Access          of state aid), the second is “collaborative”, based
      department;                                        on supporting potential demand.
      UNI EN ISO 9001:2008 and UNI EN ISO                   Speci cally:
      14001:2004 for Tim Brasil (Business Unit of              the claw-back model (already used in recent
      Rio de Janeiro and São Paolo);                           years in Tuscany and Sardinia and now applied
      CMMI-DEV (Maturity level 3) for the company              in other areas) has been adopted by the EU to
      Shared Service Centre;                                   accelerate the dissemination of broadband in
      ISO/IEC 27001:2005 for the company Shared                areas of market failure. The model envisages
      Service Centre, focused on the Security Assur-           the allocation of contributions in compensa-
      ance processes in the phases of Risk Analy-              tion for the lack of yield on investments, dis-
      sis, Risk Assessment and Security Operations.            tributed on the basis of public tender;
                                                               the collaborative model includes some of the
                                                               main agreements signed by Telecom Italia in
                                                               the course of 2009, among which is the letter
                                                               of intent with the Marche Region (now being
The spread of information and communication                    worked out with other territories).                     35

technology creates considerable opportunities for                                                                    EXTERNAL
progress for the people. Telecom Italia is aware of      In 2009, the development and implementation has          STAKEHOLDERS
the need to manage this development in the best          continued of the company’s data processing instru-         customers
way, taking on the responsibility for coordinating the   ment for operational and decision-making support
actions of all the players in the broadband ecosys-      called the “Digital Divide Project” (DDP), which con-
tem, in order to avoid exposing the Community to         tains the complete coverage map for ADSL, ADSL2+,
the risk of a technological divide due to geographic     20M/IPTV, and UMTS of Italian territory, taking
and socio-cultural reasons.                              into consideration the industrial districts, territo-
                                                         rial initiatives and complaints. DDP is used not only
Geographical Digital Divide                              for the daily handling of requests and complaints
In 2006, Telecom Italia launched an important Anti       about Broadband but also to direct the technical
Digital Divide Plan, aimed at covering, at relatively-   network interventions in the districts exposed to
limited investment, the largest possible number of       the Digital Divide. In December, a “Digital Divide
towns which generate low revenues and/or are not         Day” was staged, an internal workshop attended by
as yet equipped with optical infrastructure.             Telecom Italia’s Chairman and CEO and two speci c
   The plan provides for the best combination of in-     stakeholders in the Broadband ecosystem (Marche
novative, technological solutions and methods of rais-   Region and the Autonomous Province of Trento). On
ing the necessary investments. By the end of 2009,       this occasion, the rst edition of the Yearbook on
96.5% of the total of Telecom Italia’s xed lines were    Digital Divide was presented, the document in which
covered by ADSL and 57.6% were covered by IPTV.          Telecom Italia illustrates to the stakeholders the
   As regards the accessibility of Broadband on mo-      quantitative data on the status of the Digital Divide
biles, the percentage of residents covered by Telecom    in Italian regions.
Italia through UMTS (Universal Mobile Telecommuni-          To enable those who live and work in areas not
cation System) was 83.3% by the end of 2009. The         covered by ADSL to access the Internet, Telecom Ita-
same percentage was able to access another im-           lia launched the offer “Alice without barriers” which,
portant radio mobile technology, HSDPA (High Speed       thanks to a special modem and a TIM Card, allows
Downlink Packet Access), which allows speeds of          high speed navigation on the Internet.
               Socio-cultural Digital Divide                                     the purchase card, or bene ciaries of the pur-
               In a world in which technology enables contact be-                chase card (in cases in which the purchase
               tween people, Telecom Italia is contributing to the               card holder is a different person) appropriately
               breaking down of the socio-cultural barriers which                delegated to bene ciaries over 65, or pur-
               restrict the possibility of participation in the informa-         chase card holders in the event of bene ciar-
               tion society, allowing people to enjoy its bene ts.               ies under 3.
                  Telecom Italia offers certain provisions and eco-
               nomic assistance aimed at promoting the use of              The purchase card must already be activated at
               Tlc services and the Internet in favour of speci c          the moment in which the “Social Card” facility is
               social categories, and certain services of assist-          requested.
               ance aimed at customers with speci c needs (the                The facility lasts for a year and may be renewed,
               elderly, the sick etc.) or to health organisations. For     presenting once again the documents required.
               further information on Digital Inclusion, see § The
               Community.                                                  Assistance services

               Offers and special rates                                    MYDoctor@Home

               Offers for customers with hearing impairment                Thanks to this service, patients suffering from chron-
               In 2010, Telecom Italia will extend the two offers          ic illnesses, or in post-hospital care, may monitor
               (compulsory and agreed with AGCOM) dedicated to             their physiological parameters (body weight, blood
               customers with hearing impairment:                          pressure, heart rate, blood oxygen levels, glycae-
                     “50 SMS to all”. The offer, for the 30 days of        mia, lung capacity, electrocardiography etc.) directly
     36              its activation, allows the sending of 50 SMS          from their own homes or in properly equipped areas
   EXTERNAL          messages a day at no charge to all mobile and         (health centres, chemists’, doctors’ surgeries etc.).
STAKEHOLDERS          xed numbers. For messages beyond the 50              The measurements are carried out by combining

  customers          limit, the cost is that provided by the tariff pro-   technologies developed by Telecom Italia with the
                      le of the customer or by other supplementary,        standard medical electronic apparatus on sale.
                     active offers;                                        Telecom Italia and the University Hospital of San
                     “MMS, Mail, Instant Messaging”. The pack-             Giovanni Battista in Turin (Ospedale Molinette) have
                     age includes, for the 30 days of activation with      signed an agreement to run trials of this service. The
                     an activation/renewal charge, a daily pack-           objective is to assess the bene ts in terms of both
                     age of free MMS messages to TIM numbers               the improvement of the patient’s quality of life and
                     (more than 100 MMS, at reduced cost, to the           the optimisation of costs for the health organisation.
                     mobiles of other operators), 30 Mb free mail             The use of MyDoctor@Home is, moreover, under
                     traf c independent of the APN (Access Point           trial in Rio de Janeiro by Tim Brazil in a number of
                     Name) and 9,000 free Instant Messages.                health centres across the territory, giving rise to a
                                                                           collaboration between the Brazilian authorities and
               Financial facilities: the “Social Card”                     the Telecom Italia Group in support of the dissemi-
               In addition to the facilities for xed network custom-       nation of technologies in the health eld.
               ers, regulated by the speci c resolutions of AGCOM
               (314/00/CONS, 330/01/CONS and 514/07/CONS                   The e-health platform
               and 202/08/CONS), with regard to the variations in          The e-health platform allows the delivery of health
               the line rental of February 1st, 2009, Telecom Italia       services at the national, regional and local levels.
               introduced, from that date, the “Social Card” facility,     The services, designed to improve the management
               which maintains the costs of line rental unchanged.         of the Italian health service and increase the quality
               The facility is aimed at all those customers who pos-       and effectiveness of health treatments, allow doc-
               sess the “Social Card” who have:                            tors, nurses and patients to carry out many activi-
                     a basic line (the general analogue telephone          ties remotely. The main applications of the electron-
                     network);                                             ic health care and telemedicine of the platform are:
      the creation of electronic health les and digit-    abroad, numerous innovative services, some of
      al clinical records for the local health agencies   which are still undergoing trials. These services de-
      and hospitals;                                      liver an important contribution to the containment
      centralised management of health records;           of CO2 by reducing the need to travel across the
      portals aimed at the citizen, giving access to      territory and by helping to promote different, more
      the platform’s various services, and at health      sustainable lifestyles.
      workers, for publishing medical information of
      interest to the public;                             E-learning
      the management and transmission of data             The demand for evolved educational services has
      and bio-images in order to allow remote con-        undergone a profound transformation in the course
      sultation.                                          of recent years. From the simple electronic use of
                                                          content, the focus has moved to the dissemination
Line@Medica Diabete                                       and sharing of knowledge through more engaging
This is an Impresa Semplice service for the manage-       methods. As a consequence, solutions are more
ment, on the move, of people with diabetes through        and more being sought that are able to deliver con-
the technological support of DominoMobile®. The           tent and check the progress of learning while, at the
service allows the visualisation of glycaemia data        same time, providing management functions, the
on a mobile phone and automatically updates the           sharing of knowledge (e-knowledge) and the gaming
patient’s glycaemic diary, which is archived in elec-     business.
tronic form. The service is exclusively reserved to          Telecom Italia’s e-learning platform meets the
associations in the diabetes eld which have signed        demand for developed services based precisely on
a framework agreement with Telecom Italia.                the collaboration, communication and active involve-
                                                          ment of the nal user.                                          37

Big Angel                                                    An example of the use of the platform is the ex-          EXTERNAL
The dif culty in using electronic equipment with ever     perience of the Campania Region, for which a portal       STAKEHOLDERS
more functions can represent a form of social exclu-      of digital services has been created for the Region’s       customers
sion. Big Angel was created to tackle this dif culty.     teachers in order to enable the exchange of knowl-
   It consists of an emergency device composed            edge and the use of training activities.
of two items of equipment: a telephone with a large
keypad and highly visible display, compatible with        E-tourism
acoustic equipment, and an additional cordless            With the e-tourism platform, a system of content
handset, speci cally to request help. The latter, of      management has been created for Telecom Italia’s
a small size, can be carried on a belt or around the      business clients, who require a multichannel dis-
neck with a cord. It has only two buttons, of differ-     semination tool for their descriptive content, with
ent sizes but much bigger than normal: the largest        certain security standards. The platform offers inter-
is for making emergency calls while the other can         active maps, multichannel portals, smart ticketing
be customised to remember a number of the user’s          and a virtual tourist guide, available from mobile
choice. Moreover, the cordless is furnished with spe-     phones, with information about points of interest,
ci c safety functions, such as automatically and pe-      be they artistic or practical (for example, consulates,
riodically sending a signal to the central exchange,      tourist of ces, police stations, means of transport).
automatic activation of hands-free operation in the          An important example of its application was
event of calls and sending a signal to the central ex-    demonstrated by the Municipality of Venice dur-
change when the batteries are about to run out.           ing the carnival. Through Wi-Fi, users were able to
                                                          “navigate” around the carnival events and receive
                                                          information about sites and tourist routes in real
                                                          time, as well as interacting with each other, publish-
                                                          ing photos and comments on the artistic sites they
Telecom Italia develops, in collaboration with re-        were visiting on Telecom Italia’s e-tourism platform,
search institutes and universities in Italy and           by sending an MMS.
               Teleworking                                                    the system can inform the user about the best
               Important teleworking trials have been conducted in            parking spaces and the routes to get to them,
               Telecom Italia involving around 80 colleagues in the           identifying any parking permits and applying
               area of the Testing Labs of Turin, for whom certain            the correct tariff);
               work activities were “remotised”. The principle ben-           dynamic management of the access of motor
               e ts were:                                                     vehicles to regulated urban areas (controlled
                    a growth in ef ciency in most of the activities           through personal mobile phone systems and
                    and, in some cases, an increase in effective-             devices placed in the vehicles). An example
                    ness as well (for example, trials in the home);           is the management of traf c on motorways, in
                    the optimal redistribution of time between                partnership with the motorway company, Auto-
                    work and personal needs;                                  strade S.p.A.
                    the recuperation of working hours in certain
                    situations (transport strikes, adverse weather      Mobile Ticketing/Fidelity/Payment
                    conditions etc.);                                   Telecom Italia has developed a series of Mobile Tick-
                    the saving of space through new logistical solu-    eting and Mobile Fidelity solutions which allow the
                    tions for workstation sharing between telework-     user, through mobile phone SIM cards, to validate
                    ers, devised by those taking part in the trials.    tickets and subscriptions for public transport and
                                                                        collect loyalty points for the purchase of goods.
               Telecom Italia has, in addition, launched the pro-          In this eld, Telecom Italia is conducting trials
               gramme, “Next generation work place”, aimed at           with public transport companies in Trento (Trentino
               replacing, within the three years 2009-2011, several     Trasporti) and Milan (ATM), and with the Miroglio
               thousand workstations with ”slim” PCs, containing        Group (through the Vestebene brand), in collabo-
     38        only basic network information that allows commu-        ration with Olivetti. In addition, Telecom Italia is
   EXTERNAL    nication with a central infrastructure hosted by the     preparing to launch, in 2010, remote mobile pay-
STAKEHOLDERS   data centres, leading to savings in consumption and      ment systems for procuring a wide range of goods

  customers    transmission capacity.                                   and services, through a special application on the
                                                                        mobile phone SIM card, in partnership with the Mov-
               Infomobility                                             incom consortium and the nancial institutions that
               Telecom Italia and Magneti Marelli have put together     have signed up to the initiative.
               a consortium for new infomobility services in order
               to create and market an open technological platform      Green@Home
               that guarantees a constant connection with infor-        Telecom Italia’s Green@Home system is a proto-
               mation and entertainment services, which will help       type of a domestic energy monitoring system that is
               drivers make more intelligent choices (ecodriving).      designed to improve energy ef ciency in the home.
               The system will permit integration between the au-       In addition to reducing stand-by consumption and
               tomotive and ICT environments, thanks to an in-car       monitoring the consumption of various household
               data transmission system that allows the vehicle to      appliances and lights, it allows the user to identify
               communicate with the software applications of vari-      virtuous behaviour.
               ous service providers. This platform can be used by         The system is based on intelligent sockets that
               public authorities to supply information on the road     allow the monitoring of energy consumption and
               conditions, and by rms with eets of company cars         remote control for feeding the electrical devices
               to enable them to discover the location of the vehi-     plugged into the sockets.
               cles and put them in touch with each other.                 After the trials, Telecom Italia has signed an
                  Among the solutions and services enabled:             agreement with Electrolux, Enel and Indesit to re-
                    information on the road network and traf c con-     search and develop innovative services based on
                    ditions, payment services, navigation services;     communication between next generation domestic
                    electronic management of paid parking spaces        appliances and the electrical infrastructure (allowing
                    (the location of the user of the service is moni-   the remote control and management of electricity
                    tored through their mobile terminals, so that       consumption), thanks to Telecom Italia’s xed and
mobile broadband. The aim is to create a system in        The identi cation of the issues subject to the re-
which “smart” domestic appliances are able to man-        search and innovation initiatives was done with
age themselves by regulating the consumption of           consideration of the requirements of the various
energy in the entire home, avoiding network peaks         internal/external stakeholders and development
and surges, without compromising the comfort of           trends in the risk and external threat scenarios.
the users.                                                The methods of responding to the expectations of
                                                          stakeholders have varied, according to the degree of
The smart home                                            novelty in the elds investigated and the possibil-
In December, 2009, Telecom Italia and BTicino             ity or otherwise of reaching the security objectives
launched a partnership for the “smart” management         through the integration of solutions coming from the
of the home, bringing together the solutions of Tele-     market rather than speci c, internal programmes of
com Italia’s xed and mobile broadband connectivity        research and development.
solutions and the automated devices of BTicino.
   By accessing, via the web, the automated func-         On December 21st, 2009, the Chief of Police – Di-
tions of home management (lights, roller blinds,          rector General of Public Security – and the Chief
temperature and music control) and safety (interior       Executive Of cer of Telecom Italia S.p.A. signed an
and exterior video surveillance, anti-theft equipment,    agreement to improve the prevention and suppres-
the reception of alarms and noti cation about emer-       sion of crimes that cause damage to critical digital
gencies), the customers will be able to remotely          systems, such as the main network telecommuni-
manage all the functions.                                 cations infrastructure on Italian territory run by Tel-
   The system of control and management will be           ecom Italia.
accessible through any Internet connection, even             The accord between the parties, which last three
on the move, through the use of palm devices or           years and follows on from the agreement signed in               39

evolved mobile phones which, thanks to software           2004, has been stipulated in implementation of the            EXTERNAL
applications, become simple “remote controls” for         decree of the Interior Minister of January 9th, 2008,      STAKEHOLDERS
the home.                                                 which identi ed critical national digital infrastruc-        customers
                                                          ture, that is, those infrastructures, public or private,
                                                          that manage the sectors that are nerve centres for
                                                          the operation of the country through digital and data
                                                          transmission systems.

The activities of research and innovation in the sector
of information security are mainly concentrated on:
     devising logics and innovative models in order
     to implement automatic mechanisms of con-            The Group’s companies have undertaken numerous
     trol and protection that are able to automati-       initiatives in order to protect minors from content
     cally adapt to suit the context of the threat;       that may harm their psychological and physical devel-
     the de nition and development and new so-            opment (for example, content that is violent, racist,
     lutions in order to monitor and protect the          offensive to religious sentiment, pornography etc.).
     network infrastructure and emerging services,           Guidelines have been issued for the classi -
     with particular attention to the Next Genera-        cation and checking of content distributed by the
     tion Network and the Next Generation Data            Group. These guidelines cover not only content that
     Centre;                                              is offered directly but also content owned by third
     the de nition of innovative algorithms and           parties offering their own services on space ac-
     frameworks to avoid security leaks caused by         quired within Telecom Italia’s portals.
     computer viruses;                                       Filtering systems and procedures have been
     the de nition of new algorithms for the treat-       de ned for the provision by the Group of adult con-
     ment of sensitive information.                       tent on the Internet, aimed at preventing access by
                                                          minors to any such content available on the Group’s
               portals.                                                 munication in general.
                  Regarding premium voice services, Telecom Italia            In the light of this, information initiatives have
               requires a PIN to access any services with obscene       been implemented, aimed at minors, parents and
               content, which, in any case, are not part of the serv-   teachers, on the risks connected to the new technol-
               ices offered by the Group.                               ogies and navigation on the Internet (chat lines, in-
                  The Group’s television services do not transmit       stant messaging, forums, communities etc.). These
               content that would require ltering systems. The          initiatives have required the involvement of certain
               transmission methods are in accordance with the          important stakeholders, including various public and
               current regulations and conform with the TV and          private organisations, selected, above all, on the ba-
               Minors Self-Regulation Code, subject to the supervi-     sis of the activities and commitment to safeguard-
               sion of the designated Committee, to which TI Me-        ing the rights of children (including, for example, the
               dia belongs.                                             Postal and Communication Police, www.ilFiltro.it(1),
                                                                        Save the Children, Adiconsum, GSMA, ITU etc.).
               The Italian legislative framework imposes precise              The commitment of Telecom Italia, alongside the
               obligations on matters of controlling abuse, the pro-    aforementioned institutions, international bodies
               tection of minors, and the prevention and suppres-       and associations, is evident in its participation in
               sion of digital crime. With the passing of the law       speci c work groups that have led to the implemen-
               48/2008, the latter have been brought within the         tation of targeted services for users (minors, par-
               range of the regulations laid down by Decree Law         ents, teachers etc.), such as:
               231/2001, which attributes greater responsibility to              the “abuse” topic area on the company Intran-
               the company in the prevention of these crimes.                    et, for the protection of minors and the preven-
                  From the organisational point of view, Telecom                 tion of computer crimes, to inform and make
     40        Italia has identi ed, within the company structure,               company staff aware of the activities conduct-
   EXTERNAL    Security – Risk Prevention department – Protec-                   ed and the tools in existence for preventing
STAKEHOLDERS   tion of Information, the role of the “Key contact for             digital crimes and protecting minors who use

  customers    the Postal Police”. This professional gure man-                   the internet services provided;
               ages relations, and the ow of information, with the               the “Protection of Minors” topic area on the
               Postal Police (CNCPO – National Centre for the Fight              portals telecomitalia.it and alice.it, dedicat-
               against Child Pornography on line, CNAIPIC – Na-                  ed to the protection of minors, to inform and
               tional Centre against Digital Crime for the Protection            make end users, and all the other stakehold-
               of Critical Infrastructure etc.) and the competent                ers, aware of the correct behaviour to adopt
               authorities, and has the task of coordinating, within             during navigation on the network, as well as
               the Telecom Italia Group, the process of abuse                    the values and objectives that Telecom Italia
               control, in accordance with the relevant legislative              pursues to combat digital abuse and protect
               framework.                                                        minors. Multimedia content has been posted
                                                                                 on the Alice portal to attract and actively in-
               In addition, the Telecom Italia Group has adopted an              volve minors who visit the site;
               organisation model, in accordance with Decree Law                 the noti cation form for customers/Internet
               231/2001, in which instruments have been de ned                   users. This form, available on the Group’s
               to safeguard against, and anticipate, the commis-                 institutional and commercial portals, can be
               sion of crimes, in particular the dissemination of                used by Telecom Italia’s end customers, or
               child pornography, as well as the organisational/                 by outsider users, to give noti cation of any
               disciplinary management of illegal digital informa-               crimes involving child pornography that are
               tion. For this purpose, Telecom Italia has elded                  encountered during navigation on the Internet.
               resources, technologies, processes and instruments
               for the prevention and combat of “abuse,” that is,       (1)   The www.ilFiltro.it portal was launched on the initiative of Prof.
                                                                              Michele Crudele in 2001 in response to requests for information
               any activity committed in violation of the rules of            from parents and teachers on the issue of protecting the naviga-
                                                                              tion of minors on the Internet.
               conduct and the legislation that governs the use of            The ELIS Centre Association manages activities connected to the
                                                                              portal as part of its institutional mission, and in collaboration with
               network services, digital systems or means of com-             other organisations that adhere to the ELIS Manifesto.
There is a guide to compilation, and noti ca-      also modelled on those provided and imple-
tion can also be made anonymously;                 mented by the CNCPO and the major external
the booklet “Born with the Network”, distrib-      organisations active in the area (Save The Chil-
uted through company shops, dedicated to the       dren, Telefono Arcobaleno etc.);
adult-parent public for the purposes of:           the management of the abuse desk; opera-
-   illustrating the fundamental rules for the     tional groups who handle abuse differentiated
    safe use of the Internet;                      by type of service (residential and business),
-   alerting people to the dangers that can be     formed in accordance with the national and
    hidden on the network;                         community regulations on the protection of
-   furnishing the tools to convey to children     minors, the prevention of criminality and the
    the rules of conduct and to guide them in       ght against sexual exploitation (juvenile por-
    the selection of content to consult;           nography). Their task is to receive alerts from
web ltering: in line with the Implementing         outside users/customers on alleged digital
Decree of the law 28/2006 (Gentiloni Decree)       crimes or the presence of child pornography
which de nes the technical prerequisites of        material on the Group’s networks, and then di-
the ltering tools which providers of internet      rect them to the competent department, where
network connections must use to prevent ac-        necessary involving the competent authorities
cess to sites identi ed by the Postal Police       through the key contact of the Postal Police;
through the CNCPO, Telecom Italia has also         participation in the work group “ITU Child On-
introduced a ltering system on external web-       line Protection: Guidelines for industry”, which
sites with child pornography content;              is coordinated by ITU (International Telecom-
Alice Total Security – Magic Desktop: to allow     munication Union). Telecom Italia is taking
minors to explore the web safely, Telecom Ita-     part in drawing up the Guidelines on “Child              41

lia provides the services “Alice Total Security”   Online Protection – COP” aimed at companies            EXTERNAL
and “Magic Desktop”. Alice Total Security          in the sector of broadcasting, internet and         STAKEHOLDERS
protects Internet navigation from any digital      mobile telephony. A document has been drawn           customers
attacks or threats, thanks to anti-virus pro-      up, “Guidelines for Industry”, which was pre-
grammes and a centralised rewall. In addi-         sented at the World Summit Information Soci-
tion, it is equipped with parental controls that   ety Forum 2009. On October 7th, in Geneva,
allow parents to decide which categories of        the Secretary General of the ITU presented
sites can be displayed to their children.          Telecom Italia with an award for its contribu-
Magic desktop is an operating system soft-         tion to the “Child Online Protection” initiative,
ware that works in parallel with the standard      which comes under the broader international
one. Children learn to use the computer in         project, “Global Cybersecurity Agenda” under
a simple and entertaining way. Parents can         the aegis of the United Nations. To nd out
select the sites to which the children have ac-    more: www.itu.int/osg/csd/cybersecurity/gca/
cess and set up the management of emails so        cop/index.htm;
that they can only exchange emails with peo-       participation in the Work Group “GSMA –
ple known to them;                                 Mobile Alliance against Child Sexual Abuse
the drawing up of “Guidelines for combatting       Content”, within the GSM Association, for all
child pornography on line” which facilitate the    technological and communications initiatives
objective and uniform identi cation of cases of    aimed at the protection of minors in the sec-
child pornography to be noti ed to the Postal      tor of mobile phones. In particular, the web-
Police. The aim is to minimise any interpreta-     site http://teachtoday.eu/ has been created,
tion uncertainty in the minds of the subjects      aimed at educating children and young people
concerned (chat moderators and/or commu-           in the safe use of the Internet. The portal
nity services, the developers, the abuse desk      supplies a wide range of content, including
operators etc.) and to ensure compliance with      practical suggestions for teachers in managing
the current regulations. The guidelines are        any problems connected to the use of mobile
                    phones;                                            tomer care procedures, or methods of keeping cus-
                    participation in the European project under        tomers informed, the option of enabling/disabling
                    the Safer Internet Work Programme, 2009; Tel-      non-geographic enumeration through an appropriate
                    ecom Italia has collaborated in the project pro-   PIN number etc.).
                    moted by Save the Children and Adiconsum,                Telecom Italia regularly brings the associations
                    in response to the EU initiative “Safer Internet   up to date regarding:
                    2009 – 2013”, taking part in the permanent                  “Telecom News”, attached to the Telecom Ita-
                    Round Table as part of the Italian group, Safer             lia bill; information sent monthly to customers
                    Internet. The priority is to protect minors in              concerning price changes, the launch of new
                    the wider European social context, supplying                services and offers, institutional information
                    tools to safely use web services that enable                and, in general, any news of interest to cus-
                    socialising on the network, blogs and instant               tomers;
                    messaging;                                                  “On line with You”, corporate information
                    co-operation with Telefono Azzurro: Telecom                 announcements generally concerning tariff
                    Italia made available its own infrastructures               matters and initiatives arising out of speci c
                    and services for the Toll Free Number “114”                 regulations, published in the national daily
                    Infancy Emergency (since 2003) and the Euro-                newspapers.
                    pean Toll Free Number “116000” for missing
                    children (since May, 2009).                        In addition, the Group is a founder member of the
                                                                       Consumers’ Forum, an independent association that
                                                                       brings together consumer associations, businesses,
                                                                       the academic and research worlds, and national and
     42                                                                international public institutions in order to initiate
   EXTERNAL                                                            forms of dialogue, shared endeavour and participa-
STAKEHOLDERS   Telecom Italia Group pays the utmost attention to       tion in the development and diffusion of responsible

  customers    the protection of consumers’ interests and its rela-    consumption. In 2009, various conventions were or-
               tions with the associations that represent them, in     ganised (“How we can change the consumption hab-
               the context of reciprocal collaboration and shared      its of Italians. First edition of the Consumers’ Forum
               information.                                            observatory on consumption and consumers”, “Au-
                  Launched in 1991 in trials carried out in Sicily     thority: between market development and protection
               (Palermo) and Lombardy (Milan), collaboration with      of the consumer”, “Class Action. Swapping notes:
               consumer associations was launched across the en-       universities, businesses and consumer associa-
               tire national territory in 1993. In 1995, the project   tions” etc.) which have attracted the attendance of
               was recognised by the EU as a “Pilot Project for the    several of the highest institutional gures.
               access of consumers to justice”.
                  In 2004, a new regulatory framework for concili-     The conciliation procedures
               ation was signed, followed, in July, by a protocol of   The Telecom Italia Group was the rst major Italian
               understanding for the procedure of on line concilia-    company to successfully adopt the parity concilia-
               tion for mobile phones.                                 tion procedures(2), based on the ADR (Alternative
                  In the course of the years, an ever greater
                                                                       (2)   Joint conciliation (in particular, the Telecom Italia – Consumer As-
               number of associations have signed the accord. By             sociations project) has received various of cial recognitions over
               December 2009, the Telecom Italia Group was col-              the years, both at the European and Italian levels:
                                                                                    mention in the Green Book for access of consumers to
               laborating with 20 of the leading associations. This                 justice and the resolution of disputes in consumer matters
                                                                                    within the single market (16/11/1993);
               collaboration includes meetings aimed both at guar-                  recognition of the Telecom project as a pilot project of the
                                                                                    European Union, with nance agreed by the DG XXIV for four
               anteeing the protection of customers’ rights con-                    years, from 1994 to 1997;
                                                                                    mention of the Telecom project on the DG SANCO site, in
               cerning new products and services supplied by the                    the list of ADR procedures meeting the criteria of the recom-
                                                                                    mendation of March 30th, 1998;
               Group, as well as presenting the main organisational                 approval by the DG SANCO of the pilot project for the
                                                                                    diffusion of the European joint conciliation procedure
               development projects that might impact on custom-                    (1999-2000);
                                                                                    mention of the Telecom project by Dr. A. La Torre, Attorney
               ers (for example, the reorganisation of certain cus-                 General of the Republic in the report on the administration
Dispute Resolution) model. This procedure provides                    merce, pursuing the organisational model for parity
for the establishment of a commission of concilia-                    conciliation.
tion, formed by a member of the consumer associa-                        The objective was to move to a “one-stop shop,”
tions (representing the consumer) and a representa-                   based on an approach of caring and loyalty, inde-
tive of the business. There is no third party in the                  pendently of the procedure chosen by the customer,
role of mediator or referee because the resolution                    thereby improving the dialogue and relationship with
arises solely from the discussions between the par-                   them. In the light of this, Telecom Italia has:
ties. Another particular feature is the presence of                         strengthened its own Customer Operations
a regulatory framework, the so-called “rules of the                         structure, whose task is to assist in the han-
game”, signed by the parties, which must be applied                         dling of conciliation formalities, adding 100
by the commissions.                                                         people to the 200 already operational, which
   The system is simple: the person who has a                               in the rst six months of operation allowed
problem lays a complaint. If within 30 days (as laid                        the elimination of legal actions pending from
down in the Charter of Services) the customer does                          2008, and the attainment of a positive overall
not obtain a satisfactory response, they can ask Tel-                       outcome in 87% of the cases (exceeding the
ecom Italia, or one of the associations that adhere                         90% target for consumer customers);
to the accord, to activate the procedure. Conciliation                      launched a series of training initiatives for
applications are presented at appropriate of ces                            “conciliators”, with the participation of mem-
hosted in Telecom Italia’s premises over the national                       bers of AGCOM and Co.Re.Com;
territory. The application is discussed by the concili-                     concluded a protocol of understanding with
ation commission, which identi es possible ways of                          Unioncamera, which de nes trial guidelines
resolving the dispute. At the end of each stage of                          to propose to the CCIAA for conciliation in the
the procedure, a conciliation report is drawn up. The                       electronic communications sector.                          43

procedure is free of charge and is concluded, on av-                                                                                 EXTERNAL
erage, within 45 days.                                                The initiatives undertaken have permitted a reduction       STAKEHOLDERS
                                                                      of more than 70% in the number of demands for con-            customers
At the end of 2008, on the basis of the conciliation                  ciliation waiting to be dealt with, falling from 1,230 at
case histories, it emerged that positive outcomes                     December 31st, 2008, to 351 at the end of 2009.
from conciliations under the ADR model were higher
(more than 90%) than those of conciliations conduct-
ed at the Co.Re.Com and the CCIAA (around 62%),
which the customer can choose as an alternative.
This fact can be mainly attributed to the different
client targets (consumers for the rst, businesses                     Telecom Italia Group is rmly committed to ensuring
for the second) and the different methodological ap-                  compliance with the regulations on the protection
proaches (technical-legal for Co.Re.Com and CCIAA,                    of personal data (Decree Law 196/03, the so-called
and caring in the case of the parity conciliation).                   “Privacy Code”).
   As part of the commitments made obligatory by                         To this end, Telecom Italia’s organisation model
AGCOM in December, 2008, under Resolution No.                         is based on central departments that supervise, at
718/08/CONS (see § Competitors), Telecom Italia,                      Group level, the correct application of regulations in
to reduce disputes with customers, undertook the                      the sector.
simpli cation of the procedures for avoiding legal ac-                   The adoption of legal measures and the instruc-
tions in 2009, by applying a single, uniform admin-                   tions of the Privacy Guarantor is assured by con-
istration to all the conciliation proceedings at the                  stantly updating the regulations and policies of the
of ces of Co.Re.Com and the Chambers of Com-                          Group. In particular, in 2009, the complete revision
                                                                      and updating of the “System of rules for the treat-
       of justice in the year 1999 as “the most striking example of   ment of personal data in the Telecom Italia Group”
       Italian coexistential justice.”;
       recognition by the Guarantor Authority for Communications      has been completed, which de nes, for each com-
       of the Telecom Italia – Consumer Associations (2002)
       procedure.                                                     mitment concerned, the respective measures and
               operational instructions. For the purposes of the cor-    legal, organisational and customer relations depart-
               rect application of the Privacy Code, therefore, a sig-   ments, and the suppliers, allowed the realisation
               ni cant campaign of information and awareness has         of the interventions required to conform with the
               been mounted from December, 2009, for the manag-          instructions of the Guarantor, and raise the level of
               ers concerned and those responsible for the treat-        protection of personal data. In particular, a list of
               ment, which will also continue in 2010 with a series      formally appointed system administrators has been
               of meetings, broken down according to the topics          established.
               covered and the organisational structures involved.          In addition, an assessment has been carried out
                  Regarding the treatment of the personal data of        on all aspects of privacy and security connected to
               customers, the review and adaptation of the com-          the provision of services of “data centre solutions”
               pany’s digital systems of customer pro ling – carried     (housing and hosting services, remote archiving and
               out in previous years – have allowed the provision of     disaster recovery, outsource management of cus-
               all the information and documentation required by         tomers’ digital systems etc.) aimed, in particular, at
               the Privacy Guarantor (Provision of 25/11/2009) to        business clients for the purposes of identifying the
               the providers of electronic communication services,       areas for improvement.
               in order to enable the prior checking of the conform-        Training interventions have continued to spread
               ity of the customer pro ling activities with the provi-   the culture of privacy in the company which, in
               sions on matters of privacy.                              2009, have regarded, in particular, the prerequisites
                  In the matter of data security, an important           of compliance in the treatment of the customers’
               project, launched in 2008, was continued in 2009 to       data in the commercial departments, including the
               further raise the level of information protection both    external sales network, and customer care, with
               for voice traf c and data transmissions, including        special reference to the structures which take care
     44        with regard to the speci c instructions of the Privacy    of the conciliation of disputes with the customers.
   EXTERNAL    Guarantor for suppliers of electronic communications         The effective application of the regulations is
STAKEHOLDERS   services (Provision of 17/01/2008). The new meas-         monitored through a control system based on regu-

  customers    ures have mainly regarded the introduction of strong      lar self-evaluation procedures by those responsible
               authentication systems for digital access to systems      for the treatment of data, and on checks by sam-
               which hold data traf c, including biometric recogni-      pling, carried out by the relevant central depart-
               tion for physical access and the use of dedicated         ments, based on procedures and methodologies
               systems for the judicial authorities. These measures      prepared with the contribution of the Group’s Audit-
               required multiple interventions (adaptation of digital    ing and Compliance rm.
               systems, de nition of operational processes, activi-         Finally, in accordance with rule 26 of attach-
               ties of communication, training and help desk).           ment B (Technical Regulations on Minimum Security
                                                                         Measures) of the Privacy Code, Telecom Italia de-
               In 2009, on the instructions of the Privacy Guarantor     clares it has drawn up the Data Security Planning
               on matters of system administrators (Provision of         Document (DPS) for 2009. This document lays out
               27/11/2008), measures were adopted to improve             the technical and organisational criteria adopted for
               the security and control of the operations entrusted      the protection of personal data, be it of a general,
               to internal personnel and outsourcers who run dig-        sensitive or judicial nature, that is processed by in-
               ital systems for companies. The implementation of         formation technology, as well as the training sched-
               the project, with the involvement of the technical,       ule for those responsible for the treatment of data.
 The procurement process takes account of
 the best market conditions and respect for
  the prerequisites of quality, safety and the
             protection of the environment.



Within the Telecom Italia Group, the procurement        The process of selection, assessment and control of      STAKEHOLDERS
process is aimed at the acquisition of products and     Telecom Italia Group’s suppliers is achieved, for high      suppliers
services under the best possible market conditions,     risk categories of commodities, through a pre-con-
at the same time guaranteeing the prerequisites         tractual phase of evaluation in which the economic/
of quality, safety and respect for the environment.      nancial and technical/organisational characteris-
The procurement process is based on a competi-          tics are assessed. The positive evaluation of these
tive comparison of the technical/economic offerings     characteristics allows inclusion in the Group’s Reg-
of suppliers who are selected on the basis of well-     ister of Suppliers. The Group requires every supplier
founded company procedures at Group level and           to make a commitment, on behalf of the company
bearing the hallmark of ethical dealings.               in question and any authorised sub-contractors, col-
   The Group is committed to guaranteeing the           laborators and employees, to observe the principles
quality of the procurement process and its continual    of ethics and conduct contained in the Group’s Code
improvement, in the light, too, of green procurement,   of Ethics.
by obtaining the respective certi cation of quality.       Registered companies which have received pur-
                                                        chase orders are usually subject to controls through-
                                                        out the course of the supply, which range from ven-
                                                        dor rating monitoring (the systematic assessment of
                                                        the supply) to incoming quality control (mandatory
The relevant stakeholders are the suppliers and         for the acceptance and use of the goods acquired).
sub-suppliers from which the Group acquires goods       In the course of 2008, a Global vendor rating index
and/or services.                                        was introduced experimentally, in order to assess the
                                                        performance of the supplier in its entirety. The index
                                                        takes into account aspects of the various supplies in
                                                        which the sustainability criteria count for 20%. These
                                                        criteria include indexes of accidents and contributory
                                                        propriety, as well as possession of the environmental
               and social certi cation, the level of proactivity in the   and the protection of the environment. These
               e-community and the adoption of initiatives to save        checks are conducted through an appropriate
               energy and reduce environmental impact.                    check list, in the process of being updated,
                                                                          and have the objective of promoting a bet-
                                                                          ter application of the sustainability criteria
                                                                          throughout the entire supply chain.
                                                                          In November, 2009, the certi cation of con-
               The Purchasing Department is organised in speci c          formity with the regulation, ISO 9001:2000,
               divisions, in order to give the best responses to the      of the “Management System for Quality” for
               requirements expressed by internal customers and           the Group’s Purchasing Department was con-
               external stakeholders. These expectations are con-          rmed, with speci c acknowledgement of the
               stantly monitored through surveys of both the inter-       initiatives undertaken in the eld of sustain-
               nal customers and the suppliers to check the quality       ability. This initiative has led to the mapping of
               of the services delivered (see § Main initiatives of       27 Department processes with the identi ca-
               involvement).                                              tion of 149 performance indicators that permit
                                                                          the monitoring and improvement of the admin-
               The following initiatives were undertaken during 2009:     istration of services supplied to internal cli-
                     the application continued of the “Guidelines         ents and suppliers. Moreover, the ISO 14001
                     for the Evaluation of the Life Cycle of the Prod-    certi cation has been con rmed for the opera-
                     ucts” (issued in 2007) regarding 23 prod-            tions of Service Centre Facility and Infrastruc-
                     ucts. These guidelines allow the assessment,         ture Acquisitions.
                     through an eco-compatibility index, of how far       In order to align Telecom Italia with the best
      46             the acquired goods that are managed or mar-          practices in the sector and ensure conformity
   EXTERNAL          keted by the Group meet the prerequisites of         with the strategy of sustainability adopted, a
STAKEHOLDERS         the key environmental regulations, and that          Policy of Green Procurement was de ned which

   suppliers         they are designed, realised, used and discard-       furnished the guidelines to establish the envi-
                     ed in such a way as to facilitate the manage-        ronmental prerequisites for the products/serv-
                     ment of the entire life cycle, from the environ-     ices acquired.
                     mental and economic point of view.                   The Policy considers all the phases of the
                     The product families to which the Guidelines         product life cycle: planning, production, use,
                     are applied, de ned on the basis of the volume       end of life. The document, published on the
                     acquired, their impact on the company’s reputa-      supplier portal, in the sustainability channel of
                     tion, the economic and legal risks and dangers,      the corporate site (www.telecomitalia.it) and on
                     are as follows:                                      the company Intranet, contributes to directing
                      -   products that are intended for marketing        acquisition policies in support of products and
                          (telephone terminals, switchboards, fax         services with low environmental impact.
                          machines, modems);                              Under the perspective of the continuous im-
                      -   of ce products (computers and peripher-         provement and greater involvement of the
                          als, photocopiers, paper, consumables           suppliers, questions on the Policy of Green
                          such as toners, batteries etc.);                Procurement and the adherence of the sup-
                      -   network apparatus and materials (poles,         pliers to the principles enunciated by it have
                          mobile phone antennas, cabinets, accumu-        been included in the usual satisfaction survey
                          lators, exchanges).                             dedicated to them. The action plan for green
                     For 52 suppliers, this evaluation has also           procurement which has just been drawn up will
                     been supplemented by checks on aspects of            bring a wider use of the LCCA (Life Cycle Cost
                     social and environmental sustainability, such        Assessment) methodology in 2009, applied to
                     as respect for the principles of ethical conduct     the tenders for the procurement of products/
                     in business, the adoption of procedures to           services.
                     ensure the health, safety and rights of workers
                                                        of satisfaction with the Purchasing Department
                                                        and, more generally, with Telecom Italia. The
In 2009, in the technical eld, around 23,000 con-       on line questionnaire, made up of 33 ques-
trols were carried out on the execution of work,        tions, remained active for two weeks and the
mainly on the installation of new equipment, on the     analysis involved 1,022 suppliers with access
delivery of services and works and on the mainte-       to the Portal.
nance of the network. The controls were focused on      The overall average outcome of the 328 ques-
the network businesses division, made up of nine        tionnaires compiled was 72/100 (69/100 in
companies, divided between individual businesses        2008 and 71/100 in 2007) with a percentage
and regional business groupings, which cover the        of participation of around 32%, compared to
entire country operating on the access network.         43% in 2008 and 35% in 2007.
                                                        Regarding the network works, the activities
Also in 2009, further controls were carried out on      of the e-community (launched in 2008) have
suppliers by the Purchasing Management.                 continued, aimed at improving communica-
     Supplier Evaluation: 960 evaluations were car-     tions with and between suppliers, chie y on
     ried out on 511 suppliers, of which 100 pro-       subjects regarding social and environmental
     duced negative outcomes and 68 in which judge-     sustainability.
     ment was reserved for a speci ed period of time.   To this end, an appropriate Internet site was
     Subcontractor Evaluation: 345 evaluation checks    created called “TelecHome,” which can be
     were carried out, with 18 negative outcomes.       reached through the Suppliers Portal using the
     Vendor rating monitoring: 29 six monthly re-       correct access credentials. The site, devel-
     ports were issued, concerning 198 suppliers        oped on the web 2.0 logic, contributes to the
     and 36 categories of procurement.                  dialogue in the e-community in order to:                47

     Technical-organisational audits were conducted     -   integrate the best operational practices         EXTERNAL
     at suppliers’ headquarters for Incoming Qual-          adopted in speci c subject areas;             STAKEHOLDERS
     ity controls regarding products and services.      -   publish the results obtained, in terms of        suppliers
     402 product batches were checked, of which             the environmental and social certi cation
     75 were blocked due to non-conformity.                 attained;
     Technical-organisational audits were conduct-      -   support voting campaigns on various initia-
     ed at suppliers’ headquarters for evaluation           tives, for their assessment.
     procedures: 226 checks were carried out on         In 2009, discussions were held regarding the
     143 suppliers, of which 15 produced negative       correct management of processing waste and
     outcomes and 12 in which judgement was re-         the process of training personnel on health
     served for a speci ed period of time.              and safety in the workplace.
     Technical/organisational audits were conduct-      In June, the rst seminar on the “green econ-
     ed at the headquarters of high-risk subcon-        omy, sustainability and green procurement”
     tractors (equipment/operational activities) for    was held. The seminar, which involved around
     evaluation procedures and authorisations of        a hundred people from various company man-
     use on the part of supplying businesses: 213       agements (Purchasing, Group Sustainability,
     checks on 150 suppliers were carried out, of       Open Access, TILab, Marketing and Services
     which 10 produced negative outcomes and 2          of Prevention and Environmental Protection),
     in which judgement was reserved for a speci c      had the objective of disseminating the recent
     period of time.                                    Policy of Green Procurement and, generally, to
                                                        illustrate the issues connected to the green
                                                        economy. Speakers from public organisations,
                                                        other companies and Telecom Italia suppliers
                                                        took part (see § The Environment/Product Re-
     For the third consecutive year, the Group’s        sponsibility).
     main suppliers have been involved in surveys       A review of the check list used to assess the
                      social and environmental sustainability was                                   to the latter. The new check list has been ap-
                      launched with the aim of improving and ex-                                    plied as an experiment to certain suppliers.
                      tending the audit of the suppliers on these                                   Downstream of the observations that emerge,
                      issues. The changes led to an increase in                                     a de nitive check list will be drawn up in the
                      the number of questions and their de nition                                     rst months of 2010 which will be used for
                      in three elds of inquiry: ethics, environment                                 subsequent audits.
                      and labour policies, with particular attention

               2009 RESULTS AND 2010 COMMITMENTS

                 SUBJECT                   2009 COMMITMENTS                               STATUS                     2010 COMMITMENTS

                 ISO 9001 and              Retention of the ISO 9001 for the              Achieved                   Retention of the ISO 9001 for the
                 ISO 14001                 Group’s Purchasing Department and                                         Group’s Purchasing Department and
                 certi cations             ISO 14001 for the service centre fa-                                      ISO 14001 for the service centre fa-
                                           cility and infrastructure procurement                                     cility and infrastructure procurement
                                           operations of the same Department.                                        operations of the same Department.

                 E-community               Development and extension of the               Partially                  Development and extension of the
                 project                   e-community to additional divisions            achieved(1)                e-community to additional divisions
                                           and suppliers.                                                            and suppliers

                 Green                     Introduction of environmental                  Achieved in the            Introduction of environmental criteria
                 procurement               criteria, with a weighting no less             rede ned version           in the procurement speci cations of
                                           than 10%, in tenders for some of the           in the course of           additional products/services.
                                           main products for marketing.                   2009(2)

      48         Controls on                                                                                         De nition of the new check list of
                 suppliers                                                                                           ethics and sustainability, to be used
   EXTERNAL                                                                                                          during the 2010 audit to assess the
STAKEHOLDERS                                                                                                         socio-environmental sustainability of
                                                                                                                     the suppliers.
                 Controls on                                                                                         Extension of the sustainability to
                 suppliers                                                                                           production establishments in the
                                                                                                                     Far East(3).

                 Green                                                                                               The continuation of the application
                 procurement                                                                                         of the “Guidelines for the evaluation
                                                                                                                     of the life cycle of the products” to
                                                                                                                     the product families already identi-

                 Green                                                                                               Implement the green procurement
                 procurement                                                                                         action plan and consequently
                                                                                                                     increase the volume of “green”
                                                                                                                     procurement through the use of
                                                                                                                     the instrument of the life cycle cost
                                                                                                                     analysis in carrying out procurement

               (1) The development of the existing e-community has continued                     energy consumption, packaging and materials (plastics, paints…).
                   with the discussion of other issues, and agreements have been           (3)   It is planned to extend the sustainability audit to suppliers with
                   entered into with suppliers for the extension in 2010 to additional           production establishments in the Far East. A speci c check list
                   divisions.                                                                    will be de ned including assessments on: child labour, health and
               (2) The objective was achieved in the following version, rede ned in              safety, freedom of association, non-discrimination, disciplinary
                   the course of 2009: in the acquisition of certain products (corded,           practices, working hours, remuneration, environment and ethics.
                   cordless, fax) obligatory procurement speci cations were incor-               The audits will be carried out by company personnel and third
                   porated for suppliers regarding eco-sustainability criteria covering          parties.
    The importance of fair competition for all
                             the stakeholders.


                                                                   dio and Television Federation, HD Forum,            49

                                                                   DGTVì, Auditel, CNID;                            EXTERNAL
The Group’s companies are committed to promoting               -   in the world: ETNO (European Telecommu-       STAKEHOLDERS
fair competition, a factor considered to be in the in-             nications Network Operators’ Association),      competitors
terests of the Group, of all those who operate in the              EIF (European Internet Foundation), EABC
market and customers and of stakeholders in gen-                   (European-American Business Council), ITU
eral. They promote and participate in initiatives and              (International Telecommunication Union),
projects, in collaboration with the competitors, con-              EITO (European Information Technology
cerning the management of technical round tables                   Observatory), BIAC (Business and Industry
and the activities of the trade associations.                      Advisory Committee), GII (Gruppo di Inizia-
                                                                   tiva Italiana).

In this area, the Group interacts with certain stake-
holders, including:                                      Telecom Italia is involved in the management of
     OLO (Other Licensed Operators) made up of           association relations, coordinating lobbying and
     150 Tlc operators, large and small, of xed          representation activities with Con ndustria and its
     networks and mobile networks;                       member associations.
     the Italian Communications Authority (AGCOM);          The initiatives at the national and local levels
     the Competition and Market Authority (AGCM);        consist of actions and meetings about business
     the regional associations, federations/trade        development and protecting the company’s interests
     associations:                                       in the elds of economics, regulations, trade unions
      -   in Italy: Con ndustria, CSIT (Con ndustria     and labour. These initiatives are based on dialogue
          Innovative and Technological Services), As-    and on the comparison of the respective positions
          stel, Assoelettrica, Assinform, Fondazione     in order to identify, where possible, a common posi-
          Ugo Bordoni, Audio and ICT District, Ra-       tion of the sector to be represented in national and
                European Community institutions.                         Television Federation (RTF) in its role as a member of
                                                                         the Presiding Committee. Besides the national and
                The Group subscribes to 100 national associations        satellite broadcasters, RTI and Sky, RTF brings togeth-
                and, in particular, to Con ndustria – Innovative and     er 150 local radio stations. The general meeting of
                Technological Services, Asstel, Assoelettrica, and,      the Federation is held every six months; the ordinary
                from 2010, also Assinform, the national associa-         activities are carried out by the internal structure,
                tion of the main Information Technology companies        which takes part through its representative in various
                operating in the market. The role of the latter is to    working discussions and publishes a monthly news-
                act as a link between the main economic, political       letter.
                and institutional forces with regard to the objectives
                and problems connected to the development of Italy       TI Media is associated with DGTVì, the national as-
                as a National System, also through recourse to in-       sociation for digital terrestrial broadcasting, together
                novation and new technologies.                           with RAI, Mediaset, D-Free and the associations
                                                                         which bring together the local television broadcast-
                Together with the other operators, Telecom Italia        ers, Aeranti-Corallo and FRT. In 2009, the activities
                takes part in the Fondazione Ugo Bordoni (FUB), an       of the Association have taken place through the task
                institution of high culture which aims to carry out      forces established for each region which, according
                research and studies on matters of communication         to the ministerial calendar, has tackled the passage
                and digital technology in order to promote scien-        from analogue TV to digital: Valle d’Aosta, western
                ti c progress and technological innovation. FUB,         Piemonte, Trentino-Alto Adige, Lazio and Campania.
                which carries out consultancy activities in relation
                to Parliament, the Government and the independent        The activities and objectives of the Association are
      50        administrative authorities, has a new bylaws since       established by the Administrative Council, in which TI
   EXTERNAL     2009, which assign control and management to the         Media participates through its own representative.
STAKEHOLDERS    Public Administration.

  competitors                                                            Telecom Italia Media is a partner in Auditel with a
                Telecom Italia participates in the Audiovisual and       shareholding of 3.33% and has a representative on
                ICT District, a Consortium of around 60 enterprises      the Board of Directors and another on the Technical
                that operate in the information technology, telecom-     Committee. Auditel is the only body recognised in
                munications, networking and media sectors. Spon-         Italy for audience gures, including by the advertising
                sored by the Municipality of Rome, the Union of          agencies, who put a value on the advertising slots
                Industrialists and the Rome Chamber of Commerce,         on individual television channels on the bases of the
                the objective of the District is to express and rep-     “data” recorded by Auditel.
                resent, within its eld, the industrial activities and
                services which operate in the new economic area,         TI Media takes part in the work of the CNID (Italian
                alternatively known as major convergence or multi-       National Digital Committee), which brings together
                media.                                                   all the representatives of the value chain in the dig-
                                                                         ital market. The Committee is chaired by the deputy
                Telecom Italia and Telecom Italia Media are found-       Minister of the Ministry of Economic Development
                ing members of the Forum on High De nition (“HD          with responsibility for Communications, alongside
                Forum”) which pursues the objective of promoting         two deputy chairmen (an AGCOM Commissioner and
                and disseminating high de nition technology in Italy.    the Chairman of DGTVi). It acts through four different
                Membership of the Forum enables constant updates         operational groups covering the following areas: Net-
                about the activities of competitors in the high de ni-   works Technology and Development; Monitoring and
                tion eld (in particular, Sky, Mediaset and Fastweb)      Data; Communications and Customer Assistance;
                and the promotion of initiatives addressing questions    Speci c Problems in the Public Broadcasting Service.
                of regulation and standardisation.
                                                                         In 2003, TI Media and MTV subscribed to the Self-
                Furthermore, TI Media subscribes to the Radio and        regulation Code for the protection of minors on TV, as
part of which the TV and Minors Committee was es-          of the Italian population to gauge the image of the
tablished with responsibility for control of the commit-   telecommunications and mobile telephony service
ments under the Code. TI Media has been elected as         providers.
the broadcasters’ representative and therefore has            Quantitative surveys are periodically carried out
a privileged position as observer with regard to the       on a representative sample of the adult Italian popu-
institutions for the purpose of maintaining a construc-    lation to measure the effectiveness of the advertis-
tive dialogue with the sector.                             ing for xed and mobile telephony and Tlc services.
                                                           These reveal the renown of the individual providers,
In addition, on August 1st, 2009, the dissemination        the spontaneous and solicited awareness of the
has begun of commercial services of unencoded pro-         advertisement, the memory and enjoyment of the
grammes on the “tivù” satellite platform, a company        advertising.
in which TI Media has a 3.5% holding with RAI and
Mediaset owning the rest. Tivù promotes a unique
platform of services in digital terrestrial and unen-
coded satellite (tivùsat) television.
                                                           The commercial management of Telecom Italia –
Finally, on November 10th, 2009, following the sign-       National Wholesale Service (NWS) – is the point of
ing of the Self-regulation Code on matters of the rep-     commercial reference for the other licensed opera-
resentation of judicial matters in radio and television    tors (OLO) for the provision of network infrastructure
transmissions, a Committee of implementation was           and/or services, aimed at the subsequent market-
established. In addition to TI Media, the Committee is     ing by the said OLO of electronic communication
formed of representatives of RAI, Mediaset, the local      services to their own end customer. In this context,
broadcasting associations, FRT and Aeranti Corallo,        NWS takes care of the phases of planning, provi-               51

the National Press Federation and the National Order       sion, contract negotiation, sales, assistance and           EXTERNAL
of Journalists. The Committee operates on the basis        invoicing of the products/services provided. In rela-    STAKEHOLDERS
of a Charter, carrying out investigations on behalf of     tions with Telecom Italia, and in particular with NWS,     competitors
television audiences, ACGOM and the members of             respect for the principles of equality of treatment
the Committee.                                             and non-discrimination, sanctioned by the current
                                                           regulatory framework and in particular by resolution
As regards, nally, the activities of collaboration at      152/02/CONS, is ensured through the organisation-
the international level, the Group collaborates with       al and administrative separation between Telecom
various organisations and/or trade associations in         Italia’s Retail Department and NWS: this separation
which it takes part, such as ETNO, EIF, EABC, EITO,        is certi ed annually with technical veri cations con-
GII, ITU, BIAC.                                            ducted by an outside organisation.

                                                           NWS annually de nes and proposes the offer of ref-
                                                           erence for the various wholesale markets. The proc-
                                                           ess of approval of each offer of reference involves
Every year, a qualitative and quantitative survey is       joint examinations and reviews designed to provide
carried out to analyse the strength of the Telecom         the clari cations requested by AGCOM, which ap-
Italia and TIM brands, both in absolute terms and in       proves its contents, checks the work of NWS to
comparison with competitors.                               ensure the protection of competition, and identify
   For Telecom Italia, speci c focus has been di-          macro issues open to examination by all the OLO.
rected on the business targets (formerly SOHO              AGCOM is also the guarantor and the authority of
and SMEs) in terms of the value of the brand and           reference in the causes promoted by the OLO and
competitive positioning in comparison with the main        the end users on regulatory matters.
   Every three months, moreover, a quantitative            Each OLO has direct relations with its own Account
survey is carried out on a representative sample           Manager of reference in the Sales department of
                NWS, who receives the requests of the OLO for           In order to measure the degree of satisfaction of the
                which they are responsible, customising the re-         OLO, Telecom Italia (NWS) has recently conducted
                spective contractual instruments of the offer, with     surveys of customer satisfaction aimed at all the op-
                respect for the current regulatory obligations. These   erators with contractual relationships with NWS.
                contracts include clauses which establish constant         The surveys, carried out through interviews pre-
                monitoring of the various phases of the supply of       ceded by an exploratory phase, have allowed the dis-
                the service, ensuring that a number of the main indi-   closure of the items of greatest importance for the
                cators are subject to period noti cation to AGCOM.      OLO. To make the internal personnel of Telecom Ita-
                The interests of the client are therefore safeguarded   lia aware of the caring of the customer-OLO, speci c
                in a continuous manner, formalised through a proc-      training courses are regularly held.
                ess of conference calls, video call and meetings
                through which all the company departments con-          NWS, nally, annually organises the “Wholesale Fo-
                cerned are involved.                                    rum”, meetings with the OLO to explain news regard-
                                                                        ing Telecom Italia’s products, services and techno-
                Telecom Italia, under the perspective of the improve-   logical developments for the wholesale world. On
                ment of the company processes, has presented a          these occasions, any organisational changes carried
                complex, integrated series of “Commitments” de-         out to ensure services remain in line with the needs
                signed to improve the performance of the delivery       of the market are communicated. Outside experts
                of services supplied to the OLO which, following the    also take part in the Forums on economic, technical
                Procedure, 351/08/CONS, were approved by AG-            and regulatory issues that give rise to round table
                COM and came into force on January 1st, 2009 (for       debates, together with representatives of the OLO
                more information, see § Commitments regarding the       and NWS, on issues of greatest interest.
      52        access network).
STAKEHOLDERS    Telecom Italia, through NWS, has promoted ongo-

  competitors   ing technical discussions to encourage dialogue
                with the OLO. With reference to the processes of
                provisioning and technical assistance (assurance),      Telecom Italia interacts with AGCOM with the aim of
                suitable National Assistance Centres have been cre-     contributing to the administration of the regulatory
                ated which work through operational and specialised     process on issues of relevance to the growth in val-
                support structures and which communicate with the       ue of the Company, attempting to in uence changes
                internal departments of Telecom Italia to ensure        in the market over the medium to long term. In this
                the level of service and the implementation of the      light, Telecom Italia pursues a steadfast dialogue
                agreements with the OLO.                                and a continuous discussion with the authorities
                                                                        and institutions with the aim of arriving at a simple,
                Among the initiatives implemented in administrative     effective and symmetrical regulatory framework.
                areas to improve attention to the needs of the OLO      Furthermore, the Group makes its own knowledge
                are the following:                                      available by participating in public consultations,
                     tracing of complaints for greater transparency     institutional hearings, conventions, public meetings
                     in the process of management and resolution;       and by presenting appropriate testimony and peti-
                     tracing all the communications exchanged;          tions. The constant discussions with AGCOM and
                     constant monitoring of the economic/ nan-          the institutions ensure that Telecom Italia gathers
                     cial/assets management, thanks to the publi-       opinions, supplying transparent, reliable responses,
                     cation on line of the statement of accounts.       and anticipates events, creating and exploiting the
                                                                        best opportunities for the Company.
                The dialogue with the OLO is further helped by the
                NWS portal, which contains the historic data, up-       The public consultations provided by the provision
                dated in real time.                                     schedules of the authority, market analysis and
                                                                        fact- nding inquiries into the regulatory framework
on matters of services and electronic communica-         ments, in addition to responding to the Authority’s
tions network, transposed into national law through      requests, conveyed regularly in carrying out the
Decree Law August 1st, 2003, no. 259 (“Code of           tasks assigned by the law 287/90 and the Consum-
electronic communications”), are carried out ac-         er Code, periodically organise meetings for the ex-
cording to the provisions contained in the resolu-       change of information. The objective is to facilitate,
tion 453/03/CONS. In carrying out these activities,      under the perspective of transparency, the under-
the Authority pursues the principles of transparency,    standing of the development of the market and the
participation and debate established by the law of       effects on the area of responsibility of the Authority.
August 7th, 1990, no. 241.                                  Among the objects of preventative information are
   Furthermore, the resolution of disputes between       the development of the Group’s provision, the com-
electronic communication operators is regulated          pany’s position on strategic issues such as the devel-
by the resolution 352/08/CONS, while the inquiry         opment of the access network and Net Neutrality, the
proceedings aimed at uncovering violations and ap-       development of the criteria adopted for the pricing in
plying penalties by the Authority are regulated by the   the markets in which the Company is in a dominant
resolution 136/06/CONS, amended by the resolu-           position, and the technical and economic characteris-
tion 173/07/CONS. With the approval of the resolu-       tics of certain offers disputed by competitors.
tions 130/08/CONS and 131/08/CONS, the pen-                 In the event dispute proceedings are begun, the
alty procedures may end with a ruling of dismissal,      Group presents its case in the appropriate forums,
when the Authority con rms the correct and effective     in some cases presenting to the Authority undertak-
implementation of commitments presented by the           ings which reduce the alleged anti-competitive as-
operators for which a violation has been alleged on      pects at the centre of the proceedings. The Author-
matters of network supply and electronic communi-        ity, having assessed these undertakings, may make
cation services.                                         them compulsory and end the proceedings without                 53

   Telecom Italia responds in accordance with the        imposing any nancial penalty. The last two proceed-          EXTERNAL
times and methods established by AGCOM for the           ings launched in 2008 were ended with the accept-         STAKEHOLDERS
various proceedings (for example, public consulta-       ance of the undertakings.                                   competitors
tions, defensive testimony, the supply of data and in-
formation of various nature, etc.) and always ensures    Within the Company, moreover, there are a series of
the completeness and reliability of the contribution.    preventative controls on processes with a potentially
   In the case of violation proceedings, Telecom         signi cant impact in Antitrust terms such as, for
Italia presents testimony, expert reports and other      example, the provision of marketing plans, the de-
defence documents, requesting a hearing by those         velopment of contractual matters, the conditions of
responsible for the proceedings on the facts that        the provision of Tlc services, the development of the
are the subject of the dispute. Telecom Italia may       company’s information systems. The controls are
decide to present a proposal, subject to the termi-      aimed at ensuring that the operational management
nation of the disputed conduct, aimed at improving       of the processes take into consideration this poten-
competitive conditions in the sector, removing the       tial impact. To spread awareness and disseminate
anticompetitive consequences through suitable, sta-      a correct approach to the issue, in the rst months
ble measures.                                            of 2010, a management training programme will be
                                                         launched on the application of the regulations on

As part of the protection of competition and the con-
sumer, Telecom Italia Group interacts with the Anti-
trust authority both in a preventative way and during    In December, 2008, AGCOM approved the volun-
proceedings launched by it.                              tary undertakings presented by Telecom Italia with
   As preventative action, the company’s depart-         resolution 718/08/CONS, subdivided into 14 main
                groups, plus three additional groups of a methodo-         The creation of Open Access is linked to the stra-
                logical nature (variation, expiry, modulation).            tegic role of Telecom Italia’s xed access network,
                                                                           with its potential for development and connected
                The impact of the commitments on the stakehold-            investments. Open Access is a fundamental infra-
                ers, both internal (shareholders) and external (cus-       structure, not only for the Group but for the entire
                tomers, institutions, competitors and the Commu-           country, through which all the alternative players in
                nity in general) can be broken down into different         the market have constructed their own infrastruc-
                aspects. Speci cally:                                      ture, and provided new services to the Community.
                      greater satisfaction of the wholesale and retail        In particular, Open Access provides access serv-
                      customers, promoting innovation in internal          ices to the Retail Marketing Department of Telecom
                      processes, the qualitative development and           Italia and the alternative operators through the Na-
                      improvement of the xed access network and            tional Wholesale Services Department (for further
                      respective services, the reduction of disputes;      information, see § Services to the OLO). The activi-
                      the development of fair competition with com-        ties of Open Access and NWS for the production of
                      petitors, considering this to be in the interests    access services are separate, and independently
                      of the Group, the market, the customers and          managed, from the other commercial departments
                      stakeholders in general, promoting a more ef -       of Telecom Italia Group.
                      cient and effective equality of technical and eco-      In addition to the creation of Open Access, the
                      nomic treatment among the marketing depart-          implementation of the commitments, with their com-
                      ments of Telecom Italia and the other operators;     plexity and signi cant impact on the system of exter-
                      the maintenance of competitive conditions in         nal stakeholders, requires the provision of appropri-
                      the transition to new generation networks in         ate governance in which each organisation plays its
      54              order to ensure the creation of an open net-         own role.
   EXTERNAL           work able to offer the Community high quality           Speci cally, AGCOM has established:
STAKEHOLDERS          services;                                                 the Monitoring Group which supervises the

  competitors         more transparency in the evolution of Tel-                proper execution of the commitments;
                      ecom’s xed access network for competitors                 the OTA (Of ce of Telecommunications Ad-
                      and institutions through the communication of             judicator) which gives notice of and settles
                      the technical plans for quality and the develop-          disputes between operators and improves the
                      ment of the infrastructure;                                 ow of information and associated processes;
                      the acceptance of petitions from AGCOM, con-              the Next Generation Network Committee which
                      sumer associations and alternative operators,             draws up solutions regarding questions con-
                      contributing to the development of a model for            cerning technical, organisational and economic
                      relations and solutions to problems through               aspects connected to the transition to new
                      constructive relationships founded on a cli-              generation networks.
                      mate of trust and continuous discussion.
                                                                           Telecom Italia has established:
                At the centre of these commitments is the role of               the Supervisory Body, a committee with guar-
                Open Access, the structure created in February,                 anteed independence established in 2008,
                2008, within the Technology & Operations Depart-                which veri es the proper execution of the com-
                ment, which acts in a logic of ef ciency, quality and           mitments, ensuring equality of access for the
                equality of treatment:                                          other operators to the xed network infrastruc-
                      all activities of development and maintenance             ture through the Open Access department and
                      of the technological infrastructure of the ac-            the attainment of the objectives of quality of
                      cess network;                                             the service;
                      the process of the provision of the access                the Commitments Coordination Commit-
                      services for the customers, both of Telecom               tee, set up by the departmental managers of
                      Italia and the other operators, and the respec-           Telecom Italia, reporting directly to the Chief
                      tive technical assistance.                                Executive Of ce, which monthly supervises
the whole process, monitors the progress and       A year from their establishment, the state of
de nes the position of Telecom Italia in the       progress of the commitments is extremely positive,
various work groups;                               both in terms of ful lment and in terms of innovative
Telecom Italia’s Equivalence department, dedi-     solutions in the internal company processes.
cated to guaranteeing the implementation of           The work groups have absorbed the spirit of in-
the commitments on competition, which meets        novation and improvement set forth by the commit-
regularly in technical work groups with compet-    ments, developing them in terms of ef ciency and
itors, providing the results achieved and exam-    quality of the service offered to the end customers,
ining the issues of interest raised with AGCOM     and allowing the attainment of the preestablished
and other institutions;                            formal objectives, above all in the technical work
the department of Operations Governance –          groups on access services conducted with the other
Equality, Ef ciency and Quality of Open Access     operators.
which ensures the supervision of the plans            Telecom Italia has substantially achieved not
arising from the regulatory issues in line with    only the identi cation of innovative solutions shared
the commitments, including the reporting and       among the operators but has launched a new model
monitoring of the data regarding the equality of   of relations based on continuous discussion and
treatment of Tlc operators.                        cooperation.


      Conducting a dialogue with the institutions
      in order to improve the life of citizens and
      safeguard the interests of the Group.


      56                                                                       vironment Programme – UNEP), specialised
   EXTERNAL                                                                    agencies (International Telecommunication Un-
STAKEHOLDERS     Telecom Italia Group is determined to continue its            ion – ITU) and Convention Secretariats (United

  institutions   collaborative and transparent relations with national         Nations Framework Convention on Climate
                 and supranational institutions in order to facilitate         Change – UNFCCC).
                 dialogue on matters of mutual interest and to en-
                 sure the Group’s viewpoint is faithfully represented.

                                                                         Telecom Italia constantly keeps abreast of legislative
                                                                         activity by monitoring the ow of policy-making (sum-
                 The key stakeholders of the Telecom Italia Group are:   maries of parliamentary proceedings and the activi-
                      the central national institutions: Parliament,     ties of the Council of Ministers) with the aim of:
                      Government, Ministries, central and local pub-           understanding the expectations of the nation-
                      lic administration;                                      al, central institutions and the evolving trends
                      the local institutions: Regions, Provinces, Mu-          in parliamentary and governmental regulatory
                      nicipalities;                                            initiatives;
                      the Italian Communications Authority (AGCOM)             identifying potential impact on the strategy
                      and the Guarantor Authority for Competition              and business activities of the Group;
                      and the Market (AGCM) (see § Competitors);               adopting strategies to protect the company’s
                      the European and international institutions:             position.
                      the European Commission and the Regulatory
                      Committee under its supervision, the Council,      The reporting activities are principally conducted
                      the European parliament and the ERG (Euro-         with the parliamentary members of the Commis-
                      pean Regulators Group);                            sions of the Chamber and Senate concerned with
                      the United Nations Organisation (UN): Global       issues that could impact on the company such as,
                      Compact, Programmes (United Nations En-            for example, those of an economic- nancial nature
or concerning privacy, telecommunications, Internet       tions are also of the collaborative kind and are
and television. Participation in parliamentary hear-      broadly carried out according to the logic previously
ings (called by the parliamentary commissions) are        described with, in many cases, the involvement of
also important to examine speci c issues, which           the other ICT operators. The actions carried out are
represent opportunities to discuss matters of inter-      both of the institutional kind (for example, participa-
est such as, for example, the recent fact- nding          tion in public consultations, workshops, meetings
inquiry into the digitalisation of the public adminis-    of parliamentary Commissions) and the collabora-
tration carried out by the Chamber. In this case, the     tive type, with other operators (meetings with the EU
electronic communications operators, Telecom Italia       Commission). Among the issues tackled at the Euro-
among them, were called to report on the state of         pean level, the subjects of the main regulatory/leg-
implementation of the instruments to enable e-gov-        islative documents of interest to the Group, are the
ernment, such as broadband.                               revision of the Community Directives, the Recom-
   As a consequence, the dialogue with the institu-       mendation on termination, the Recommendation on
tions is followed in certain cases by dispositions        regulated access to the Next Generation Networking
and presentations of proposals for amendments to          (NGN), the roaming Regulation and the review of the
individual measures.                                      Universal Service.

Moreover, Telecom Italia provides information to          In most cases, the response to the expectations
ministers (mainly the Minister for Economic Devel-        of the institutional stakeholders and the identi ca-
opment) concerning the activities of the inspec-          tion of the actions to be undertaken on individual
tion body (parliamentary questions) directed at the       regulations in the interests of the Group cannot be
Group. Projects and Protocols of Understanding            planned in advance. Therefore the reaction times,
have been de ned with the national institutions           determined by the process of legislative approval,              57

aimed at the dissemination of ICT, broadband con-         must be fairly rapid. This means that the internal           EXTERNAL
nections and the digitalisation of the country. For       dialogue in the company on these institutional is-        STAKEHOLDERS
example, the Protocol of Understanding, signed with       sues, aimed at informing the competent internal             institutions
Minister Gelmini for the diffusion of ICT tools for       departments on the regulations of interest and
teaching in schools, forms part of this activity.         receiving feedback on important aspects, must be
At the local level, Telecom Italia maintains a con-
stant dialogue with the institutions on subjects of a     Telecom Italia Media also maintains a constant dia-
general nature regarding the electronical communi-        logue with the institutions on subjects of interest to
cations sector and on issues of local interest with       the company and has carried out a series of actions
signi cance for the company’s business, from the          with regard to regulatory acts, public consultations,
perspective of problem solving and promoting the          positioning requests by AGCOM, including:
Group’s image. The monitoring and constant interac-             the request for the partial postponement of
tion with the decision-making centres of local institu-         the obligations for scheduling and investment
tions occurs by means of hearings, participation in             in support of European works established
workshops, the work of regional Commissions and                 by the Regulation approved by AGCOM under
ministerial and specialist work groups. Furthermore,            66/09/CONS. The decision to take advantage
Telecom Italia regularly organises communication ini-           of the possibility for postponement, estab-
tiatives on speci c issues of local interest.                   lished by the said Regulation, for the stations
   Coordination with the company departments                    of the TI Media Group, and in particular for
operating at the territorial level is fundamental in            La7, MTV, QOOB and for the satellite channels
acquiring information regarding the approaches and              of MTV, was dictated by the needs of balance
expectations of local institutions and providing suit-          and scheduling;
able solutions.                                                 public consultation (launched under the resolu-
                                                                tion 526/09/CONS of September 30th, 2009)
Relations with European and international institu-              concerning the identi cation of the emerging
                       platforms for the marketing of broadcasting         2008, and April 10th, 2009. For each region, the
                       rights for sports, which was concluded on Oc-       Communications Department has established a spe-
                       tober 30th, in which TI Media, in concert with      ci c task force, in which TI Media also participates.
                       the other companies of the Group, gave notice
                       of the necessity of incorporating among the         Regarding relations with the UN, the activities car-
                       emerging platforms IPTV, DVB and the mobile         ried out as part of the Global Compact were of
                       platforms such as GSM, GPRS and UMTS.               particular importance, taking the form of participa-
                                                                           tion in the work group on human rights and the Net-
                 Regarding the regulatory activity carried through by      work Italia. Telecom Italia and Telecom Italia Media,
                 the Ministry for Economic Development – Communi-          the two companies of the Group which adhered to
                 cations Department – 2009 featured the switch-off         the Global Compact, compile the “Communication
                 of analogue television, replaced by digital terrestrial   on Progress” annually, the document in which the
                 broadcasting in Valle d’Aosta, western Piemonte,          progress achieved in the promotion and actual ap-
                 Trentino Alto Adige, Lazio and Campania in accord-        plication of the 10 principles on which the Global
                 ance with the ministerial calendar of September 10th,     Compact is founded is reported.


   How the Information and Communication
   Technology (ICT) sector can contribute to
                     building a better future.

                                                        THE ENVIRONMENT

                                                             the local institutions (see § Institutions);               59

                                                             associations active on the issue and the initia-       EXTERNAL
The environmental strategy of the companies of the           tives in which Telecom Italia participates: EU      STAKEHOLDERS
Group is founded on the following principles:                Corporate Leaders Group, Global e-Sustainabil-       the environment
     optimising the use of energy sources and natu-          ity Initiative (GeSI), European Telecommunica-
     ral resources;                                          tions Network Operators’ Association (ETNO),
     minimising negative environmental impact and            European Telecommunications Standards In-
     maximising positive impact;                             stitute (ETSI), CSR Europe, European Academy
     pursuing the improvement of the environmen-             for Business in Society (EABIS), Carbon Disclo-
     tal performance;                                        sure Project (CDP);
     adopting procurement policies that take ac-             the environmental associations active on the
     count of environmental issues;                          issue: WWF, Legambiente, Greenpeace, etc.
     disseminating a culture promoting the correct
     approach to environmental issues.                  Telecom Italia pays close attention to the needs
                                                        expressed by stakeholders concerned with the pro-
                                                        tection of the environment, keeping abreast of their
                                                        expectations by maintaining multiple active channels
                                                        of communication and dialogue such as AVoiComu-
The representative gure of the stakeholder “The         nicare, the Festival of Science, the Future Centre of
Environment” can be identi ed in future generations,    Venice and the Group’s Intranet site. In addition, it
in the sense of a subject who has the right to an       promotes, and in some cases coordinates, projects
environment that has not been compromised by the        at the national and international levels on the issue.
impact of the current generation. More speci cally,
the holders of interest include:
     the Community in general, with particular refer-
     ence to the territorial areas in which Telecom
     Italia operates;                                   The information on the environmental performance
                   has been drawn from management data. In accord-            sumption for heating and transport (Scope 1) and
                   ance with the principle of materiality, only those         indirect consumption through the acquisition and
                   subsidiary companies have been included in the             consumption of electricity (Scope 2) are given.
                   consolidated accounts that have revenue greater                In the following tables, under the heading Do-
                   than 300,000 euros and more than 40 employees,             mestic/Brazil/Other activities, the domestic opera-
                   excluding discontinued operations/non-current as-          tions of xed and mobile telecommunications are
                   sets held for sale.                                        included, as well as the respective support activi-
                      The environmental performance data given below          ties, the Netherlands broadband services and the
                   cover energy, atmospheric emissions, water, paper,         activities of the TIM Brasil Group.
                   waste and electromagnetic and noise emissions.
                                                                              The data in the table regarding Telecom Italia S.p.A.
                   Energy                                                     shows an overall reduction of consumption for heat-
                   The energy consumption of Telecom Italia S.p.A. and        ing systems and, in particular, the consumption of
                   the Group is shown below, calculated according to          diesel. The change in the composition of the en-
                   the accounting procedures established by the Global        ergy mix of diesel and methane fuel is due to the
                   Reporting Initiative – GRI G3 Guidelines. Direct con-      modernisation of the plants, which has favoured

                                                                                                                            CHANGES %
                                                                           Telecom Italia                  2009                   2009
                                                                             S.p.A. 2009                vs 2008                vs 2007

                    Energy consumed in diesel fuel               MJ        112,979,718                (20.80%)                (24.45%)
                    Energy consumed in methane fuel              MJ        689,048,720                   0.67%                 (4.48%)
STAKEHOLDERS        Total energy for heating                     MJ        802,028,438                 (3.03%)                (7.86%)

 the environment


                                                                                                  TI GROUP BREAKDOWN BY BU (%)

                                                                           Telecom Italia         Domestic/         Media      Olivetti
                                                                             Group 2009          Brazil/Other

                    Total energy for heating                     MJ        919,813,181                92.05%        0.35%       7.60%

                   ENERGY CONSUMPTION FOR HEATING (%)                         ENERGY CONSUMPTION FOR HEATING (%)
                   TELECOM ITALIA S.P.A.                                      TELECOM ITALIA GROUP
                                                      diesel                                           Olivetti

                                                      14.09%                         Media             7.60%

                       methane                                                Brazil/
                                                                              Other activities
                       85.91%                                                  92.05%
solutions of reduced environmental impact. A spe-                          reached in this area (see § Introduction/2009 Ob-
ci c environmental objective has been de ned and                           jectives and Results).


                                                                                                                          CHANGES %
                                                                          Telecom Italia                  2009                  2009
                                                                            S.p.A. 2009                vs 2008               vs 2007

  Consumption of unleaded petrol                                 l           5,335,302                (47.51%)              (62.02%)

  Diesel consumption                                             l         17,678,505                  21.84%                63.98%

  Total energy consumption          (*)
                                                                 MJ       802,128,520                 (5.02%)               (4.11%)

(*)   Represents conversion into MegaJoules of the consumption of
      unleaded petrol and diesel expressed in litres.

                                                                                                                          CHANGES %
                                                                          Telecom Italia                  2009                  2009
                                                                            S.p.A. 2009                vs 2008               vs 2007

  Total number of company vehicles                                no.           21,068                 (1.77%)               (2.27%)

  Number of low-emission vehicles           (*)
                                                                  no.           20,787                 (1.47%)               (1.98%)

  Total distance travelled                                        km      308,682,237                  (1.68%)               (1.05%)          61

(*)   Vehicles fuelled by unleaded petrol, eco-diesel, bludiesel, GPL
      (meeting the Euro4 standard or higher), electricity or fuelled by
      other combustibles with comparable or lower emissions.                                                                            the environment

In Telecom Italia S.p.A., the reduction of energy con-                     standards (Euro4 or higher) with diesel engines that
sumption for vehicles is due, as well as to the reduc-                     are more ef cient compared to petrol engines. This
tion of the overall distance travelled by the vehicles,                    change has also led to an increase in the consump-
to the gradual change in the composition of the eet                        tion of diesel and a fall in that of petrol.
in favour of vehicles meeting high environmental

FOSSIL FUELS FOR VEHICLES (%)                                              TOTAL DISTANCE TRAVELLED
TELECOM ITALIA S.P.A.                                                      TELECOM ITALIA S.P.A.

           76.82%                                   23.18%
            diesel consumption                      green petrol

                                                                                       2009 vs 2008         2009 vs 2007

                                                                                                                             TI GROUP BREAKDOWN BY BU %

                                                                                              Telecom Italia               Domestic/          Media         Olivetti
                                                                                                Group 2009                Brazil/Other

                     Total number of vehicles                                   no.                 22,703                     98.82%         0.43%          0.75%

                     Total energy consumed                                      MJ           1,263,639,200                     98.29%         0.69%          1.01%

                     Total distance travelled                                   km            340,392,214                      97.67%         0.96%          1.37%

                   (*)   The data shown refer to the number of all vehicles (including               where usage is signi cant and continuous, the vehicles, consump-
                         ships, for which the number of kilometres travelled is not shown)           tion and travel distances of vehicles owned or in use by the sales
                         of the Group (industrial, commercial, used by senior and middle             force of Tim Participações have been included.
                         management and the sales force), both owned and hired. Only

                               76.82%                                 23.18%
                   Consumption of electrical energy for the operation of transmission and civil/industrial plants.
                         diesel consumption             green petrol
                                                                                                               2009 vs 2008               2009 vs 2007
                                                                                                                                                       CHANGES %
                                                                                              Telecom Italia                         2009                      2009
                                                                                                S.p.A. 2009                       vs 2008                   vs 2007

                     Electrical energy from mixed sources(*)                    kWh          2,093,375,618                         0.00%                    (1.34%)

                     Electrical energy from renewable sources                   kWh             42,955,444                        15.41%                    34.24%

                     Total electrical energy                                    kWh          2,136,331,062                         0.27%                   (0.81%)
                         Electrical energy acquired from mixed sources is equal to around            5GWh with an associated consumption equal to 6.925 million m3
   EXTERNAL        (*)
                         2,067 GWh. Self-produced electrical energy from mixed sources is            of methane gas. The production of electrical energy from continu-
STAKEHOLDERS             equal to around 26 GWh and is supplied by a co-generation plant             ous generators (not shown in the table) is estimated to be around
                         which has allowed a saving in purchased energy of more than                 4 GWh.

 the environment


                                                                                                                             TI GROUP BREAKDOWN BY BU %

                                                                                              Telecom Italia               Domestic/         Media          Olivetti
                                                                                                Group 2009                Brazil/Other

                     Total electrical energy                                    kWh          2,517,799,605                     98.10%        1.12%           0.78%

                   PURCHASED OR PRODUCED ENERGY                                                  PURCHASED OR PRODUCED ENERGY (%)
                   TELECOM ITALIA S.P.A.                                                         TELECOM ITALIA GROUP

                                                                                                                     1.12%                 0.78%

                                       2009 vs 2008              2009 vs 2007

                                                                                                     Other activities
The increase in the consumption of energy is con-               being installed in as many Data Centres. The
nected to the greater volumes of telephony/data                 energy needs will be met through a system
traf c on the transmission networks. This increase              that can produce electricity, heating and cool-
has been mainly met through recourse to the ac-                 ing, though not independently and therefore
quisition of renewable sources. In future, Telecom              alongside the usual power distribution bodies,
Italia S.p.A. will achieve a signi cant increase in             with an energy saving of around 30%;
internal production from these sources (see §                   twelve small cogeneration plants (less than
Introduction/2010 Objectives).                                  500 kW) have been created;
   The initiatives to optimise energy consumption               for 13 RBS, a supplementary mixed supply of
already undertaken in preceding years have con-                 wind and photovoltaic power (wind turbines
tinued and interventions during 2009 have mainly                from 3 to 6 kW and solar panels of 5 kWp) has
regarded:                                                       been created;
      the technological improvement of air condition-           an innovative system of natural gas (propane)
      ing equipment and interventions to reduce elec-           air conditioning has been tested;
      tricity consumption through the segregation of            100 back-up plants of hydrogen fuel en-
      environments with different temperature needs;            ergy cells have been created in place of the
      the modernising of AC/DC conversion equip-                traditional systems with lead batteries. The
      ment through the introduction of technological            introduction of this type of plant avoids the
      solutions that guarantee a better performance;            procurement and later disposal of traditional
      the maintenance of the ef ciency of the xed               batteries containing 300 tons of lead. The as-
      traditional switching network and the data                sessment of the life cycle reveals an environ-
      networks;                                                 mental bene t with about 125 tons of CO2 no
      the technological upgrading of mobile network             longer being emitted. In 2010, the replace-               63

      equipment in order to improve the performance             ments will involve another 80 plants (see Tar-        EXTERNAL
      in terms of transmission capacity, the need for           get 2010).                                         STAKEHOLDERS
      air conditioning and energy consumption;                                                                      the environment
      the adoption of ef cient technological solu-        More speci cally, regarding the initiatives adopted by
      tions for the Data Centre servers, thanks to        the Company to contain energy consumption thanks
      the concentration and virtualisation of the         to the new free cooling plants, systems of remote
      machines and the consequent reduction of the        energy management and control and the co-siting
      respective energy consumption;                      agreements with other operators, this is what the
      remote control and measurement of energy of         Group has done:
      the centres’ premises;
      the installation of time switches to turn off the   Extraction Full Free Cooling (EFFC)
      lighting equipment;                                 This cooling system meets the need to reduce
      the sharing of technological sites and Radio        consumption and not use greenhouse gases. EFFC
      Base Stations (RBS), thanks to co-siting agree-     is based on the principle of Free Cooling (forced
      ments;                                              ventilation without the use of air-conditioning), as-
      the raising of the average operating tempera-       sociated with an extraction system for the hot air
      ture of the exchanges, servers and RBS;             produced by the equipment and, if necessary, a
      the introduction of free cooling equipment and      further cooling of the incoming air achieved by using
      other low environmental impact air condition-       an area with a high concentration of vaporised wa-
      ing systems                                         ter. With an experimental system of this type, it has
                                                          been possible, in the hottest period of the year, to
On the question of promoting non-traditional/alter-       reduce by more than 80% the energy consumption
native energy sources and experimentation with new        for air conditioning compared to traditional systems.
technologies, the following initiatives have been         The outcome of the trials has led to the extension of
completed or are underway:                                the system, in 2009, to 400 exchanges.
      three cogeneration (trigeneration) plants are
                   Kaleidos                                                TiLab initiatives to contain environmental impact
                   This is an innovative system of monitoring and re-      In the development of new xed access technolo-
                   ducing the energy consumption of the equipment,         gies (FTTx), analyses are underway targeted speci -
                   installed in 90 exchanges. It takes advantage of        cally at the containment of electricity consumption
                   wireless devices with ZigBee technology (a low en-      of new equipment and, where present, of the respec-
                   ergy consumption mobile communication standard)         tive air conditioning. Telecom Italia is part of work
                   which allow the acquisition and processing in real      groups for the standardisation of equipment and ar-
                   time of information on the electricity power used       chitecture at the Italian (CEI) and international (ETSI
                   by the equipment being monitored. The information       EE/ATTM, ITU-T, ETNO, GeSI, HGI) levels. At the end
                   collected is analysed through mathematical models       of 2008, Telecom Italia, in partnership with Huawei,
                   that allow the monitoring of the level of energy con-   established the Network Innovation Centre (NIC),
                   sumption of the plants and actions to be taken to       aimed at synergic collaborations on issues connect-
                   improve the ef ciency. Kaleidos will be extended to     ed to energy saving.
                   another 100 exchanges.
                                                                           Atmospheric emissions
                   Codes of Conduct (CoC)                                  The emission of greenhouse gases by Telecom Italia
                   The commitment to contain energy consumption            and the Group can be attributed to the use of fossil
                   is also manifest in the collaboration with the work     fuels for heating, transport, production or procure-
                   groups that de ne the Codes of Conduct (CoC) on         ment of electricity, as well as for travel (home-work
                   energy consumption of Broadband equipment and           and aeroplanes). In addition, the dispersal of hydro-
                   the Data Centres. These work groups, supported          chloro uorocarbons and hydro uorocarbons (HCFC
                   by the EU through the Joint Research Centre (JRC)       and HFC) used in the air conditioning plants is taken
       64          and ETNO (European Telecommunications Network           into account.
   EXTERNAL        Operators’ Association), draw up the guidelines and
STAKEHOLDERS       consumption targets for equipment, minimising the       As with the classi cation of energy consumed, the

 the environment   energy consumption without interfering with techno-     guidelines of Global Reporting Initiative – GRI G3
                   logical development and the quality of the services.    have been followed, which refer to the de nitions
                   Telecom Italia is among the rst Tlc operators to        of the GHG Protocol(1) distinguishing between direct
                   have signed up to the Code of Conduct for broad-        emissions (Scope1: use of fossil fuels for heating,
                   band equipment (version 3); the adoption of devices     transport(2) and electricity generation) and indirect
                   that conform to the CoC allows a reduction of ex-       emissions (Scope2: procurement of electricity for in-
                   penditure on energy of up to 40%.                       dustrial and civil use(3)) and other indirect emissions
                   With respect to the Code for Electronic Communi-
                   cations to encourage a more ef cient use of the         (1) The GHG Protocol (Greenhouse Gas Protocol Initiative), estab-
                                                                               lished 1998 at the heart of the World Resources Institute and the
                   network infrastructure and optimise the coverage            World Business Council for Sustainable Development, supports
                                                                               business on the issue of greenhouse gas emissions, through
                   of the mobile network in urban and rural areas, the         methodologies of calculation and studies aimed at promoting
                                                                               innovation and assuming responsibility on climate change
                   agreements with Vodafone for sharing access sites       (2) Emissions of CO2 connected to the use of fossil fuels for power-
                                                                               ing motor vehicles and heating systems have been calculated
                   are continuing. In 2009, Telecom Italia and 3 Italia        following the directions of the UNEP (United Nations Environment
                                                                               Programme Guidelines for Calculating Greenhouse Gas Emissions
                   signed a three year co-siting agreement which cov-          for Businesses and Non-Commercial Organisations – www.unep-
                   ers both existing sites and those that will be built        tie.org) and in the case of vehicles of Telecom Italia S.p.A. making
                                                                               reference to the speci c type of motor vehicle (for the years, 2007
                   in the future (at least 2,000 sites). Each operator         and 2008, a single coef cient was used, which took account of
                                                                               the different types of vehicles. For this reason data referring to
                   retains ownership of their passive infrastructure           these years have been recalculated for comparison purposes).
                                                                           (3) To calculate the emissions from the acquisition of electrical
                   (poles and pylons, electricity and air conditioning         energy, the GHG Protocol method has been used. This takes into
                                                                               consideration the energy mix of individual countries. The national
                   plants and civil infrastructure) and hosts the other,       GHG coef cient, expressed in grammes of CO2/kWh, are as
                                                                               follows: Italy 405; the Netherlands 394. For Brazil, the coef cient
                   with a saving in energy consumption estimated to            worked out by the local Ministry of Science and Technology has
                                                                               been used, which is equal to 25 grammes of CO2/kWh, which is
                   be in the order of 30%.                                     held to be more accurate. For comparison purposes, data refer-
                                                                               ring to 2007 and 2008 have been recalculated on the basis of
                                                                               these coef cients.

                                                                                                                                       CHANGES %
                                                                              Telecom Italia                      2009                      2009
                                                                                S.p.A. 2009                    su 2008                   su 2007

  Emissions of CO2 for vehicles                                 kg              47,672,817                     (4.35%)                    (9.76%)

  Emissions of CO2 for heating                                  kg              53,043,281                     (3.52%)                    (8.31%)

  Emissions of CO2 equivalents for HCFC/HFC                     kg              29,386,020                    (27.78%)                            -

  Emissions of CO2 from cogeneration                            kg              10,419,354                    104.30%                             -

  Emissions of CO2 for diesel generation                        kg               3,639,346                       0.02%                            -

  Total direct emissions of CO2 – under Scope1                  kg            144,160,818                      (6.54%)                            -

  Emissions of CO2 from purchased electrical                    kg            832,982,452                      (0.60%)                    (2.59%)
  energy produced from mixed sources

  Total indirect emissions of CO2 – under Scope2                kg            832,982,452                      (0.60%)                            -

  Emissions of CO2 for home-work commuting(*)                   kg              65,478,775                     (4.26%)                            -

  Emissions of CO2 for air travel      (**)
                                                                kg              11,855,978                    (28.18%)                            -

  Total of other indirect emissions of CO2 – under              kg              77,334,753                     (8.91%)                            -
  Scope3 GRI

  Total emissions of CO2                                        kg           1,054,478,023                     (2.11%)                        (***)

(*)   In determining the impact of home-work commuting, reference is           (***)Startingfrom 2008 the scope of measurement of CO2 emissions
      made to personnel statistics.                                                has included new issues. For this reason, data referring to 2007
(**) The   calculations of emissions for air travel are made on the basis          is not comparable to the others.                                    the environment
      of the coef cient proposed by the GHG Protocol which depends on
      extent of the duration of individual trips.


                                                                                                         TI GROUP BREAKDOWN BY BU (%)

                                                                             Telecom Italia              Domestic/          Media         Olivetti
                                                                               Group 2009               Brazil/Other

  Total emissions of CO2 under Scope1 GRI                     kg             187,513,764                      96.58%        0.46%          2.96%

  Total emissions of CO2 under Scope2 GRI                     kg             870,513,631                      98.41%        1.31%          0.28%

  Total of other emissions of CO2 under Scope3                kg              86,586,321                    100.00%                -              -

  Total emissions of CO2                                      kg            1,144,613,716                     98.23%        1.07%          0.70%

(*)   The calculation of the Scope3 emissions refers to Telecom Italia
      S.p.A. and Tim Participações.
                   Notwithstanding the disclosure of data regarding                    sition of electricity from mixed sources due
                   additional sources not considered previously (elec-                 to the increased production of energy from
                   tricity production from cogeneration and diesel gen-                cogeneration plants and the acquisition and
                   erators, dispersal of HCFC/HFCs, home-work com-                     in-house production of energy from renewable
                   muting and air travel), the atmospheric emissions of                sources;
                   Telecom Italia S.p.A. overall have been reduced, for                reduction of the impact from home-work com-
                   the following reasons:                                              muting, dependent on the number of employ-
                        lower consumption by vehicles;                                 ees;
                        lower consumption for heating;                                 reduction of the emissions for air travel by em-
                        reduction of the CO2 equivalents emissions,                    ployees due to the reduction of the number of
                        with respect to the dispersal of HCFC and                      trips following the greater use of video confer-
                        HFC used in air conditioning plants, through                   ences (see § Climate Change).
                        the adoption of more meticulous methods for
                        preventing leaks and the replacement of these         HCFC gases, in addition to being classi ed as green-
                        gases with solutions with low environmental           houses gases with high global warming potential(4),
                        impact (see § 2009 Objectives and Results,            destroy the ozone layer. From 2010, the use of new
                        and 2010 Objectives);                                 HCFCs in maintenance will be forbidden, while their
                        an increase in CO2 emissions that can be              use in plants is allowed until 2014.
                        ascribed to the cogeneration resulting from                 Telecom Italia has conducted experiments:
                        the company’s decision to invest more in this                  in collaboration with Naples University, with
                        technology, which is characterized by prom-                    other gases that do not cause damage to the
                        ising nancial and environmental bene ts.                       ozone layer for the adaptation and replace-
       66               The increase is compensated, however, by                       ment of these substances (R22) in air condi-
   EXTERNAL             the reduced acquisition of electricity from the                tioning plants;
STAKEHOLDERS            network, which overall has led on balance to                   in collaboration with Turin University, with in-

 the environment        fewer emissions;                                               novative air conditioning systems of the Extrac-
                        stable emissions from diesel electricity gen-                  tion Full Free Cooling (EFFC) type and cooling
                        erators in situations where the electricity distri-            systems using air condensed natural refriger-
                        bution network is unavailable;                                 ating gas (propane) (see also preceding §).
                        reduction of the emissions from the acqui-

                                                                              (4)   The Global Warming Potential (GWP) is the measurement of
                                                                                    how much a speci c gas contributes to the greenhouse effect.
                                                                                    This index is based on a relative scale which compares the gas
                                                                                    considered with an equal mass of carbon dioxide whose GWP is
                                                                                    by de nition equal to 1. The GWP of the HCFC used is equal to
The total consumption of water by the Group reveals
signi cant impact by Olivetti due to withdrawal from
artesian wells for the industrial component.

         2009 vs 2008           2009 vs 2007
        2009 vs 2008           2009 vs 2007

                                                                                                               CHANGES %
                                                       Telecom Italia                       2009                    2009
                                                         S.p.A. 2009                     vs 2008                 vs 2007

 Water consumption for non-sanitary use         m            85,225                                –                    –

 Water consumption for sanitary use             m         4,370,350                      (3.80%)                   5.38%

 Total water consumption                        m         4,455,575                      (1.92%)                   7.43%


                                                                                      TI GROUP BREAKDOWN BY BU%

                                                       Telecom Italia               Domestic/          Media      Olivetti
                                                         Group 2009                Brazil/Other

 Water consumption for non-sanitary use         m         1,310,503                      7.07%         0.00%      92.93%

 Water consumption for sanitary use             m         4,727,734                     99.02%         0.60%       0.38%

 Total water consumption                        m         6,038,237                     79.06%         0.47%      20.47%

WATER CONSUMPTION (%)                                     WATER CONSUMPTION (%)                                               the environment
TELECOM ITALIA S.P.A.                                     TELECOM ITALIA GROUP

            2009 vs 2008               2009 vs 2007                     Olivetti
           2009 vs 2008               2009 vs 2007


                                                             Brazil/ activities
                                                             Other activities
                   Paper                                                       have been replaced with little more than 4,000 high
                   To reduce the environmental impact connected to             performance machines. All have a rapid system of
                   the use of paper, three areas for intervention have         stand by to reduce energy consumption and 12%
                   been identi ed: procurement, rationalisation of use         have the Energy Star certi cate, while 40% are able
                   and recycling.                                              to print on both sides of the page. This project, in
                      In 2009, for paper procurement for of ce use             addition to reducing the consumption of energy and
                   and telephone bills, Telecom Italia S.p.A. decided          paper, allows more precise monitoring of the condi-
                   only to use paper from forests managed according            tion of the printer, the consumption of toner and the
                   to the standards of the Forest Stewardship Council          management of maintenance, improving the overall
                   (FSC).                                                      quality of the service.
                      As regards the use of paper, the activities aimed
                   at the overall reduction of consumption have contin-        In the of ces, the use of paper for press reviews
                   ued. For this reason, Telecom Italia encourages the         has fallen thanks to restrictions on the number of
                   use of invoicing and statements in electronic form.         pages, the reduction in the number of recipients and
                   In 2009, more than 11 million invoices referring to         the encouragement of the method of on line use,
                    xed telephony overall have been sent on line. That         with pronounced bene ts also in terms of archiving
                   corresponds to a saving of over 200 tons of paper,          and information research. In 2010, a further reduc-
                   as well as limiting the impact of CO2 connected to          tion of paper use for press reviews of around 5% is
                   the delivery material of the envelopes.                     envisaged.
                      The process of printing in the of ces is also con-           On the recycling front, the collection of differenti-
                   nected to the use of paper. In order to optimise this,      ated waste in of ces, underway in nearly all compa-
                   the project Printing on Demand has been launched            ny premises, has seen the recycling of 21,262 tons
       68          in 675 of ces. Around 35,000 identi ed printers             of used paper during the year.
 the environment


                                                                                                                               CHANGES %
                                                                            Telecom Italia                    2009                   2009
                                                                              S.p.A. 2009                  vs 2008                vs 2007

                    Non-recycled paper purchased                kg                      0                (100.00%)              (100.00%)

                    Recycled paper purchased                    kg                      0                (100.00%)              (100.00%)

                    FSC certi ed paper purchased                kg               637,888                           -                      -

                    Total paper purchased for of ce use         kg               637,888                   (4.43%)              (11.76%)


                                                                                                    TI GROUP BREAKDOWN BY BU (%)

                                                                            Telecom Italia          Domestic/          Media       Olivetti
                                                                              Group 2009           Brazil/Other

                    Non-recycled paper purchased                kg                  2,231                 74.41%       0.00%      25.59%

                    Recycled paper purchased                    kg                90,768                 100.00%       0.00%       0.00%

                    FSC certi ed paper purchased                kg               699,036                  96.58%       2.53%       0.89%

                    Total paper purchased for of ce use         kg               792,035                  96.91%       2.24%       0.85%
TOTAL PAPER PURCHASED (%)                                TOTAL PAPER PURCHASED (%)
TELECOM ITALIA S.P.A.                                    TELECOM ITALIA GROUP

                                                                     2.24%           0.85%

            2009 vs 2008        2009 vs 2007

                                                         Other activities

Waste                                                    waste by the transporters and a new procedure has
In 2009, there was a marked increased in hazard-         been drawn up which adopts the provisions of the
ous waste due mainly to the replacement of the           ADR 2009 (the procedure will come into force follow-          69

lead batteries use for back-up energy as well as the     ing publication in the Of cial Gazette of the Decree      EXTERNAL
waste from the demolition works due to the leave of      of adoption of the regulation).                        STAKEHOLDERS
certain of ces. The increase in non-hazardous waste                                                              the environment
can also be ascribed to the decommissioning of           Telecom Italia S.p.A. and Olivetti have launched a
buildings and respective ttings. Compared to 2008,       process across the entire nation for the collection,
in 2009 the ratio between waste produced and that        recycling and disposal of non-industrial batteries
consigned for recycling/recovery has improved.           and rechargeable batteries. TI makes use of the
                                                         “ReMedia” consortium and Olivetti the “ecoR’it”
The differentiated collection of the materials in the    consortium, of which our company is the founder
of ces of Telecom Italia is underway in 280 of ces       member. In Tim Brasil, the operation to increase
across the entire country. In the course of 2009         awareness in the community on the issue of waste
alone, differentiated collection of of ce waste has      that is hazardous to health and the environment is
been extended to of ces in which, locally, the differ-   continuing. In shops and company of ces, suitable
entiated collection of urban waste is carried out (50    containers have been provided for the collection of
additional of ces of which 10 are in the north, 11 in    drained batteries and to dispose of cell phones and
the centre and 29 in the south and islands).             accessories.

Regarding the application of the ADR regulation          To contribute to the reduction of the waste pro-
(Agreement concerning the international carriage of      duced, in 2009 Telecom Italia S.p.A. refurbished
Dangerous goods by Road) covering the transport by       515,698 devices (143,000 modems, 22,500 set
road of dangerous goods, a training programme has        top boxes for IPTV, 93,500 xed terminals, 37,047
been held aimed at those in charge of the Services       telephony products, 8,149 data equipment items,
of Prevention, Protection and Environment who col-       1,895 MT4 devices, 92,820 ISDN devices and
laborate with the ADR consultant in the control of       116,787 mobile handsets). In addition to the envi-
the activities and support for the departments. Con-     ronmental advantage in terms of the lack of waste,
trols have been carried out during the withdrawal of     these activities bring a nancial bene t, in the
                   sense of the positive difference between the pro-                     de ned the collection and selection processes
                   curement avoided and the costs of the reclamation.                    for WEEE for each direct sales channel;
                                                                                         inserted appropriate clauses on the issues
                   Regarding Waste of Electrical and Electronic Equip-                   of WEEE and RoHS(5) in the conditions of pur-
                   ment (WEEE), regulated by the Decree Law 151/05,                      chase contracts.
                   Telecom Italia and Olivetti are, in some cases,
                   producers and, in all cases, distributors of certain          Following the Programme Agreement of 2003 for
                   equipment. They are therefore obliged to organise             managing obsolete wooden telephone poles, upon
                   the management of their end of life cycle for those           the favourable opinion of the autonomous State-
                   aspects under their responsibility.                           Region- autonomous Province Conference, with the
                         To effectively supervise the issue, in expectation      Ministry for the Environment and Protection of the
                   of the implementing decree, Telecom Italia S.p.A.             Territory, the Ministry of Production Activity and pro-
                   has established an appropriate work group which               duction and reclamation companies, the decommis-
                   has, amongst other things:                                    sioning also continued in 2009 with the substitution
                            formalised membership of the consortium that         or elimination of 126,422 poles.
                            is specialised in managing the end of life cycle           The data shown in the table refer to the quantity
                            of the equipment (Consorzio Re-Media);               of waste consigned(6) and legally accounted for(7).

                   WASTE CONSIGNED – TELECOM ITALIA S.P.A.(*)

                                                                                                                                       CHANGES %
                                                                               Telecom Italia                       2009                      2009
                                                                                 S.p.A. 2009                     vs 2008                   vs 2007
                     Hazardous waste                                  kg          6,268,050                       22.42%                  115.13%
                     Non hazardous waste                              kg         11,536,683                         6.97%                 (11.12%)
                     Total quantity of waste                          kg         17,804,733                      11.95%                     12.02%
 the environment
                     Waste for recycling/reclamation                  kg         16,190,509                      14.78%                      4.07%

                     Ratio between recycle/reclaimed waste and                         90.93%                      2.53%                    (7.10%)
                     total waste

                   (*)   The data does not include telephone poles.


                                                                                                           TI GROUP BREAKDOWN BY BU (%)

                                                                               Telecom Italia               Domestic/          Media         Olivetti
                                                                                Gruppo 2009                Brazil/Other

                     Total waste consigned                            kg         21,327,467                      92.57%        0.34%          7.09%

                                                                                 (5) European Directive 2002/95/EC on the restriction on the use
                                                                                     of prescribed hazardous substances in electrical and electronic
                                                                                     equipment (Restriction of Hazardous Substances Directive)
                                                                                 (6) By “waste consigned” is meant waste delivered to carriers for
                                                                                     recycling or reclamation or disposal. From checks carried out in
                                                                                     2007 in the eld of technological waste on around 6,000,000 kg
                                                                                     of waste delivered to carriers for recycling and reclamation, 97%
                                                                                     was recycled and reclaimed effectively while the remaining 3%
                                                                                     was disposed of.
                                                                                 (7) There may be slight variations in the situation from December
                                                                                     31 until the following March 31, in so far as the sources for the
                                                                                     data are the records of loading and unloading of waste that are
                                                                                     made once the actual weight has been checked at destination.
                                                                                     The information is supplied to the producer of the waste within 3
                                                                                     months of the consignment and this explains the possible varia-
                                                                                     tions in the data.

                                                                                    total                      total
                             dangerous                  other                       waste                   recycled
                               waste                    waste                     consigned              and recuperated





                                     rifiuti conferiti e riciclo/recupero (kg) - telecom italia s.p.a.

Electromagnetic and noise emissions                                  transmissions, which allows a reduction of the elec-
The concerns of the Telecom Italia Group on the sub-                 tromagnetic emissions of around 75% compared to
ject of electromagnetic emissions are essentially:                   traditional analogue methods.
      the careful and proper management of its
      equipment during its entire life cycle, in compli-             The Group also optimises emissions from mobile
      ance with the applicable regulations and inter-                telephone Radio Base Stations (RBS). In 2009, the
      nal standards of ef ciency and safety;                         target was exceeded for installing second carriers,                        71

      the deployment of, and constant research                       that is, additional antennas which allow the reduc-                    EXTERNAL
      into, the latest technological instruments for                 tion of the power of the overall eld of RBS emis-                   STAKEHOLDERS
      checks and controls.                                           sions, during periods of maximum voice traf c. The                   the environment
                                                                     use of two radio frequency carriers, also linked to
Systematic monitoring has continued of the levels                    the development of “High Speed” coverage, allows
of electromagnetic emissions in the installations of                 the total power of RBS emissions to be lower than
La7, MTV and TI Media in order to guarantee that                     15% for the same amount of traf c. This reduction
legal limits are respected and high safety standards                 value has been veri ed in trials in the laboratory of
are maintained. In particular, Telecom Italia Media                  TILab.
Group checks that:
      the levels of electromagnetic eld produced by                  Similar concern is given to the emissions from mo-
      the emissions are always lower than 20 V/m                     bile handsets operating on the frequency bands
      in locations accessible by people outside the                  operated by Telecom Italia: GSM 900Mhz, DCS
      company, while in residential areas, near nurs-                1800MHz and UMTS. In 2009, in line with the es-
      eries, schools and anywhere occupied for a                     tablished targets, all the models of technologically
      period greater than 4 hours a day, the level of                innovative mobile phones widely distributed in Italy
      electromagnetic eld is always below 6 V/m;                     and 25% of the Brazilian models have been subject-
      the level of exposure of workers does not                      ed to the SAR quali cation(8).
      exceed the values laid down by Directive
      2004/40/EC, recently brought into force under                  The issue of electromagnetism and the possible ef-
      Decree Law 257/2007.                                           fects on biological systems has been the subject in
                                                                     recent years of numerous studies and discussions
Based on the controls carried out on Italian soil,                   involving the scienti c community and public opin-
electromagnetic emissions generated by La7 and
MTV alone are within the legal limits, with levels                   (8)   SAR – Speci c Absorption Rate: the value of electromagnetic
                                                                           power absored by a given mass of tissue. SAR is measured in
signi cantly lower in the case of digital television                       Watt/kg.
                   ion. More details are available on the sustainability     Group), a work group made up of operators active
                   channel of the website www.telecomitalia.it.              in the sector at the global level (Tlc operators and
                                                                             suppliers of equipment), to accelerate the spread of
                   In the area of the reduction of noise pollution,          low-energy consumption devices and to encourage
                   checks have continued on noise emissions by com-          the adoption of ef cient technological options and
                   pany equipment. Based on these checks, 21 sites           standardisation.
                   were recti ed in 2009 (11 of the xed network and
                   10 of the mobile network). In addition, around 70         The Group also attained important results in 2009
                   maintenance/replacement interventions have been           in the measurement of greenhouse gas emissions,
                   carried out following noti cations, implementing          recognised by the Carbon Disclosure Project (CDP).
                   speci c methods of operation (for example, putting        CDP is an international initiative in its seventh
                   a timer on the air conditioning) or creating anti-noise   year of operation which encourages companies to
                   barriers.                                                 manage the risks and emerging opportunities from
                                                                             climate change. The Group has participated in the
                   Interventions to reduce the visual impact of the          initiative since 2005. In 2009, in spite of growing
                   mobile network antennas in places of landscape of         selectivity, the Group had the best results among
                   particular merit also continued in 2009.                  Italian companies belonging to the “Global500”
                                                                             index, and, in relative terms, has moved from 6th
                                                                             place in 2008 to 5th place among participating com-
                                                                             panies in the Tlc sector.

                   The scienti c community attributes a signi cant role      Telecom Italia has subscribed to the Copenhagen
       72          to industrial processes, and humanity in general,         Communiqué prepared by the Corporate Leaders
   EXTERNAL        in the increase in the frequency and severity of ex-      Group on Climate Change (CLG) which operates
STAKEHOLDERS       treme climatic phenomena and global warming. The          with the support of the University of Cambridge. The

 the environment   containment of these phenomena within limits con-         communiqué has given voice to a signi cant part of
                   sidered as non-catastrophic is one of the challenges      the companies of the EU and the world (950 compa-
                   that humanity must tackle, mainly by reducing the         nies from 60 countries) on the expectations for the
                   emissions of carbon dioxide and other greenhouse          COP15 of the United Nations in December, 2009.
                                                                             The approach followed by the Group to combat cli-
                   The Information and Communication Technology              mate change is conducted at two levels:
                   (ICT) sector can play a fundamental role, not only in           reduction of its own direct and indirect emis-
                   containing its own CO2 emissions, but above all by              sions of greenhouse gases;
                   contributing to the reduction of the emissions of the           encouragement and support for the demateri-
                   other sectors, thanks to the provision of services              alisation of goods and service by contributing
                   which enable new ways of working, learning, travel-             to the reduction of the emissions of the other
                   ling and, more generally, living. According to the              sectors.
                   Global e-Sustainability Initiative (GeSI Smart 2020),
                   ICT will be responsible for around 3% of global           Reduction of emissions
                   emissions of CO2 in 2020 but will contribute to the       The environmental impact of Telecom Italia in terms
                   reduction in the CO2 emissions of other industrial        of CO2 is determined, as shown in the preceding par-
                   sectors of around 15%.                                    agraphs, by direct emissions from the use of fossil
                                                                             fuels, indirect emissions through the procurement
                   For this reason, Telecom Italia participates in vari-     of electricity and other indirect emissions such as
                   ous initiatives promoted by bodies such as CSR Eu-        home-work commuting and air travel.
                   rope, ITU, ETNO, ETSI, GeSI and Sodalitas. Telecom
                   Italia is moreover among the coordinators of the EE       The initiatives underway and planned in Telecom Ita-
                   IOCG (Energy Ef ciency Inter-Operator Collaboration       lia are numerous, in particular:
     replacement of Euro3 vehicles with many kilo-        tablishes a relationship between the service offered
     metres travelled with Euro4 diesel vehicles          to the customer (simpli ed as the measurement
     with anti-particulate lters and the reduction of     of bits transmitted) and the company’s impact on
     the number of vehicles. The modernisation of         the environment (energy consumption). The factors
     the eet has involved 1,504 cars with a reduc-        taken into consideration are the amounts of data
     tion of emissions of around 30% compared to          and voice traf c of the xed/mobile networks and
     those produced by the decommissioned vehi-           industrial energy consumption (for transmission and
     cles (around 2,169 tons of CO2 emissions);           climate control in the centres), domestic (electric-
     substitution of most diesel- red heating sys-        ity for of ce use, air conditioning and heating in the
     tems with methane- red heating systems. The          of ces) and consumption for vehicles. The following
     conversions in 2009 brought a fall in CO2 of         table shows the level of the eco-ef ciency indicator
     214 tons (in line with the target set);              in recent years.
     adherence to the EEB (Energy Ef ciency in
     Buildings) Manifesto, promoted by the WBCSD
     (World Business Council for Sustainable Devel-       ECO-EFFICIENCY INDICATOR
     opment), for the development of a programme
                                                           YEAR            KBIT/KWH              BIT/      % INCREASE
     broken down into ve actions: de nition of a                                                JOULE    YEAR 200X VS
     database of the energy consumption preced-                                                                 200X-1

     ing the ef ciency initiatives; publication of a
                                                            2004              777,248            216              +58%
     policy on the energy performance of the build-
                                                            2005           1,311,676             364              +70%
     ings; de nition and administration of audit
     programmes for verifying the implementation            2006           2,175,006             596              +63%

     of the programmes de ned; annual publica-              2007           3,144,283             873              +45%          73

     tion of the energy data, CO2 emissions and the
                                                            2008           4,237,038            1,177             +35%
     progress of the programmes; promoting the                                                                           STAKEHOLDERS
                                                            2009           4,739,570            1,317             +12%
     energy ef ciency of buildings among suppliers,                                                                       the environment
     employees and other stakeholders.
     The initiatives, operational in 2010, will involve
                                                                       2004     2005     2006   2007    2008   2009
     50 company properties used as of ces;                1,500
     the NGDC (Next Generation Data Centre)
     project with the aim modifying the Information
     Technology architecture through the physical          900

     concentration and virtualisation of the servers,
     reducing the current 11,350 servers to less
     than 2,000 by 2011. This new con guration,            300

     based on the Service Oriented Data Centre               0
     model, allows the reduction of the costs of
     maintenance/management and energy con-                   indicatore di eco-efficienza

     sumption. The NGDC regime will allow energy
     saving in the order of 40% compared to the           In 2009, the indicator values, although slightly im-
     initial con guration.                                proved, were lower than expected. The annual in-
                                                          crease is progressively diminishing: energy ef cien-
Regarding the initiatives launched to reduce energy       cy measures and the rise in traf c already achieved
consumption, and therefore indirect emissions, (see       have reduced the margin for further improvement.
§ Energy).                                                The commitment is being carried through with the
                                                          de nition of the target for 2010: 1,410 bit/Joule
Eco-ef ciency indicator                                   (+7% compared to 2009).
For years, Telecom Italia S.p.A. has measured its
own energy ef ciency by using an indicator that es-       For the rst time, Tim Brasil has measured its own
                   eco-ef ciency indicator to monitor its performance.       ICT favours the replacement of traditional physi-
                   The 2009 value is 117 bit/Joule. Nevertheless,            cal products and services with digital products and
                   the data cannot be compared with that of Telecom          processes (for more information, see § Customers).
                   Italia SpA due to the many differences: the technol-      For example(9):
                   ogy used (only a mobile network in Brazil, mobile                  video and audio conferencing services avoid
                   and xed networks in Italy), geographic features,                   the need for the transport of people;
                   the climatic situation and the type of customer. The               Tlc services facilitate and allow teleworking,
                   indicator will however be very useful in implementing              reducing the consequences of the home-of ce
                   future actions of improvement.                                     commuting;
                                                                                      on line invoicing and payments, in addition to
                   Mobility management                                                saving paper and therefore the energy required
                   Telecom Italia has launched the Mobility Manage-                   to produce and transport it, eliminates the
                   ment project in order to reduce the environmental                  need for transport for making payments.
                   impact of the home-work commuting and contribute                   telemedicine services reduce the need for
                   to improving the quality of life of employees, in par-             doctor-patient meetings, limiting travel and, as
                   ticular in Italian cities with urban traf c dif culties            a consequence, the emission of greenhouse
                   and high atmospheric pollution. For the manage-                    gases;
                   ment of ces, public transport companies have been                  infomobility systems, using information ob-
                   contacted in order to improve connections and in-                  tained from mobile handsets, allows the opti-
                   centives for the use of these means.                               misation of traf c ows, reducing travel times
                   A space has been created on the Intranet dedicated                 and the emission of greenhouse gases;
                   to the mobility of employees, by offering information              the systems for the monitoring and analysis of
       74          and services and collecting opinions and sugges-                   consumption allow the optimisation of the en-
   EXTERNAL        tions, in order to promote sustainable transport                   ergy ef ciency of of ces and dwellings.
STAKEHOLDERS       practices. The space is divided into three: noti ca-

 the environment   tions and proposals, information on the accessibility     ICT technologies can therefore modify the features
                   and connections of the of ces, car pooling. The car       of products and services (price, ef ciency and,
                   pooling between employees, proposed as an alterna-        therefore, convenience) leading to increased de-
                   tive solution to traditional means of transport, con-     mand. On a large scale, the environmental impact
                   sists in grouping several people together to make         obtained can become negative (increase in the
                   journeys in a single car, and identifying people with     demand for energy, major problems in the manage-
                   compatible transport needs (hours, place of depar-        ment of waste generated by technologically obsolete
                   ture and arrival etc.). Car pooling leads to reduced      products). It is the responsibility of the ICT sector,
                   impact on the environment, lower transport costs for      and therefore also of Telecom Italia, not to under-
                   the participants, less use of the car and a reduction     estimate this effect, minimising their own negative
                   in psychological and physical stress.                     impact on the environment and putting faith in the
                   A link with Telecom Italia’s Carbon Meter (see § In-      research and development of products with low envi-
                   formation) allows the quanti cation of the reduction      ronmental impacts throughout their entire life cycle
                   of CO2 emissions and the bene ts reaped from car          (see § Product Responsibility).
                   pooling, increasing the level of environmental aware-
                   ness.                                                     In 2009, Telecom Italia established partnerships

                   Telecom Italia as part of the solution
                                                                             (9)   It has been estimated that 100 million audio conferences in the
                   ICT can play a signi cant role in the ght against               place of physical travel could save more than 2 million tons of CO2
                                                                                   emissions, that 10 million teleworkers working only two days a
                   climate change through the promotion and diffusion              week from home, would lead to a saving of nearly 11 million tons
                                                                                   of CO2 and that if 10 million users received their telephone bills
                   of products and services which encourage behaviour              on line instead of the traditional paper ones, there would be a
                                                                                   saving of around 11,000 tons of CO2. The examples are indicative
                   that can reduce or eliminate the emissions of green-            and are intended to give a concrete indication of the potential of
                                                                                   Tlc services. They are based on projects, veri ed by independent
                   house gases generated by the transport of people                third parties, tested on a small scale by members of ETNO as
                                                                                   part of the initiative, “Saving the climate @ the speed of light”
                   and objects in the territory. In general, progress in           developed together with the WWF (www.etno.be/sustainability).
and launched services to respond to the need to re-       On the subject of the management of the territory
duce environmental impact.                                and the optimisation of the energy resources, Tel-
                                                          ecom Italia has offered Smart Town to local adminis-
An agreement was signed between Telecom Italia,           trations. This solution, already adopted by a number
Electrolux, Enel and Indesit for the testing of an        of administrations, has led to signi cant energy ef -
innovative technological system in which smart do-        ciency: just the application covering public illumina-
mestic appliances optimise the energy consumption         tion is able to generate alone a reduction in electric-
in the home. People can nd out their consumption          ity consumption of up to 30%.
directly on their PC, mobile phone or on the displays
of domestic appliances, downloading customised            Telecom Italia coordinates the E-Cube project which
programmes for the eco-ef cient management of             researches, develops and implements innovative
their own home. This is the rst step towards the          ICT solutions which allow the ef cient management
smart grid, intelligent networks that allow informa-      of energy in the domestic and industrial elds. The
tion to be sent to domestic appliances that allows        project will develop smart plugs, smart appliances,
them to be programmed automatically on the basis          optimal algorithms for the management of equip-
of the availability and price of energy, avoiding peaks   ment and other components that may be used for
in demand for energy and surges on the transmis-          the remote control and monitoring of consumption.
sion networks (see § Customers/Innovative Serv-           Particular attention is being paid to the protection of
ices).                                                    the consumers’ privacy which will use solutions put
                                                          forward by E-Cube, and to the de nition of policies
Telecom Italia offers MyEnergy to its customers, an       to guarantee their diffusion. In addition to Telecom
energy management service (www.tigreen.it) based          Italia, which is also coordinating a work group, the
on ICT solutions that allow the optimisation of en-       project, partly nanced by the Tender 2015 – Energy                               75

ergy consumption through remote monitoring sys-           Ef ciency of the Ministry for Economic Development,                          EXTERNAL
tems of the equipment, using evolved sensors and          sees the participation of Edison Energia, Electrolux,                     STAKEHOLDERS
applications made available by the Date Centres of        Energy Team, NERA Economic Consulting, Neohm,                              the environment
Telecom Italia. Speci cally, the following are part of    Ospedale San Raffaele, RPS-Riello, STMicroelectron-
the offer:                                                ics, Telit, the “La Sapienza” University of Rome and
         MyEnergy – Analysis: analysis of the energy      the University of Verona.
         MyEnergy – Power Management: for the man-        In 2009, around 2,000 video conferences were
         agement and optimisation of electricity con-     staged between the Telecom Italia of ces of Rome
         sumption;                                        and Milan, and around 5,700 multi-video conferenc-
         MyEnergy – Lighting Management: for the man-     es and 18,000 audio conference between several
         agement of public and private lighting equip-    company of ces. In addition to these, managed cen-
         ment;                                            trally, a great number of video and audio conference
         MyEnergy – Gas Management: for the monitor-      have taken place continuously among personnel
         ing and optimisation of the business of gas      trained in the autonomous use of independent work-
         bottle distribution companies.                   stations. The use of these systems avoids substan-
These solutions allow the reduction of the consump-       tial emissions of carbon dioxide (and other pollut-
tion and energy expenditure thanks to the following       ants) connected to the use of means of transport(10).
activities: prompt, integral monitoring of energy con-
sumption; the display of the data regarding various
peripheral of ces; the implementation of automation
                                                          (10) On average, around 10 people take part in each video conference
to reduce consumption; veri cation of the consist-            and half of these would have travelled to take part in the meeting.
                                                              It can be estimated, solely for video conferences carried out be-
ency between the energy bills and the consumption             tween the management of ces in Rome and Milan, that there has
                                                              been an overall reduction in emissions of 1,200 tons of carbon
registered; support in the choice of the most suit-           dioxide. Each person travelling between Rome and Milan would
                                                              have led to an impact of around 120 kg and each event replaced
able Energy Provider.                                         would save not less than 600 kg (the estimate is made only for
                                                              air traf c: around of 1000km for the round trip with a medium
                                                              range impact factor of 0.12 kg per km – source GHG Protocol).
                                                                                      electronics free of halogen substances, an-
                                                                                      ticipating and exceeding the latest European
                   To improve the product stewardship pro le at the                   regulations on the matter;
                   company level, products/services marketed by Tel-                  the feeder conforms with the prerequisites for
                   ecom Italia S.p.A. are also examined under the fol-                Energy Star energy yield and the EU Code of
                   lowing criteria:                                                   Conduct on Ef ciency of External Power Sup-
                         health and safety of consumers;                              plies – v4;
                         labelling of products and services;                          the assembly does not involve the use of ad-
                         marketing communications;                                    hesive and is achieved in a way that allows
                         respect for privacy;                                         easy dismantling of the various electronic com-
                         conformity with applicable regulations;                      ponents;
                         environmental impact of the product.                         the packaging is recycled cardboard and de-
                                                                                      signed to minimise impact during the transport
                   Some of the main initiatives promoted by Telecom                   phase.
                   Italia in this eld are given below.
                                                                           The product is furnished with an environmental dec-
                   Marketed products are subject to a technical test       laration drawn up in accordance with ISO 14021 (En-
                   aimed at ensuring their conformity with European Di-    vironmental Declaration of Type II).
                   rectives and national laws, in particular:                  The assessment of energy consumption associ-
                         the EU regulations on the protection and safe-    ated with the eco-cordless, estimated on the basis
                         ty of customers in using the equipment;           of a standardised operation cycle of 2 hours daily
                         the RoHS regulation which prohibits the use of    use, 2 hours a day in stand-by and 20 hours a day
       76                certain substances in electrical and electronic   waiting and being recharged, reveals an annual ener-
   EXTERNAL              equipment;                                        gy consumption of 13.9 kWh, with an energy saving
STAKEHOLDERS             the WEEE regulation on the disposal of prod-      of around 40% compared to similar products.

 the environment         ucts at the end of their life cycle;
                         European regulations nos. 1275/2008 and           In addition, a review has been held of the end-life
                         278/2009 which implement the EuP (Energy-         processes of the home access gateway(11) used for
                         using Products) directive for terminals and       the delivery of residential and small business broad-
                         their respective external feeders.                band services, from which the requirements have
                                                                           been drawn for Design For Environment (DFE) for
                   Telecom Italia was among the rst Tlc operators to       future generations of product. Among the improve-
                   have adhered to the Code of Conduct for v3 Broad-       ments identi ed, the following should be noted:
                   band Equipment, a document that de nes energy                      the review of the structure of the product’s
                   consumption targets for modems, home gateway                       plastic body, with the reduction of the number
                   and other network domestic appliance and the ac-                   of parts and the optimisation of the aspects
                   cess network (see § Energy).                                       concerning dismantling;
                                                                                      the use of recycled plastics, when possible,
                   Quality tests are conducted on products to con rm                  with regard to the physical and mechanical
                   respect for the prerequisites of energy ef ciency,                 characteristics and their suitability for use by
                   environmental impact and safety. For the checks car-               the customer;
                   ried out on mobile handsets, see § Electromagnetic                 packaging in recycled material with the reduc-
                   and noise emissions.                                               tion of unnecessary plastic wrapping;
                                                                                      reduced bulk and weight of the packaging to
                   In 2009, an eco-cordless handset was launched                      minimise impact during the transport phase;
                   on the market with minimal environmental impact                    use of a uni ed feeder to maximise the pos-
                   throughout its life cycle:
                         the body is in PLA bio plastic (biodegradable     (11) TheHome Access Gateway is a device that allows the connection
                                                                               of several private customers to the same network through the
                         polylactic acid derived from corn);                   concentration of voice, data and video traf c.
      sibility for reuse;                                       Green Procurement
      review of the logistics of collecting products at         Waste management
      the end of their life cycles and of the process           Soil pollution
      of assessing the possibility of regeneration;             Reduction of the consumption of paper and the
      the identi cation of technical strategies to              replacement of virgin paper with recycled paper
      increase the energy ef ciency of the access
      gateways: the tests carried out, on the average     An article was published in the corporate maga-
      methods of use at home by the customer and          zine “noi.magazine” covering the development of
      depending on their number, allow an estimated       the Integrated Management System of Safety and
      annual energy saving in the order of 100GWh.        the Environment in customer care. In addition, the
                                                          publication of the “noi. ash” bulletin has continued,
During 2009, the methodology of Life Cycle Analysis       dedicated to issues of corporate responsibility.
(LCA) was applied to around 23 products intended
for marketing (mobile phones, xed telephones, fax         On June 5th, World Environment Day, Tim Brasil
machines and printers) under the auspices of the          made its Environmental Policy of cial, launching an
Green Procurement project (see § Suppliers/Main           internal campaign aimed at increasing the aware-
sustainability initiatives).                              ness of personnel with regard to the environment.
                                                          To assist this, a list of simple actions was provided
In de ning the network architecture and the techni-       to be shared with the family, such as the practice of
cal speci cations of the equipment and passive            collecting differentiated waste and used batteries
components, criteria have been adopted designed           and storage devices, the choice of recyclable and re-
to minimise the environmental impact (for example,        cycled materials, saving water and energy.
consumption, bulk, noise and battery use). These                                                                          77

prerequisites are included in the Requests for Quo-       A speci c programmes has been created with Azze-            EXTERNAL
tation (documents drawn up of the technical lines to      roCO2 for numerous events, in particular those of an     STAKEHOLDERS
clarify the speci cations of the products to be pro-      environmental nature, to reveal the impact and com-       the environment
cured) compatible with the requirements of service        pensation of the respective emissions.
and costs.

Telecom Italia has, in addition, published a Policy of
Green Procurement (see § Suppliers/Main sustain-
ability initiatives).                                     Through the Group’s television broadcasters, La7
                                                          and MTV, many programmes have been produced
                                                          and initiatives carried out aimed at spreading aware-
                                                          ness and involving the public on environmental mat-
                                                          ters. In particular, for World Environment Day, the
The dissemination and support for the environmen-         initiative “La7 and the environment: a commitment
tal culture helps reinforce the sustainable develop-      exclusively for everybody” was launched inviting
ment of the Group’s activities. In the course of the      viewers to send in, to the website www.la7.it/ambi-
year, in addition to environmental issues of general      ente, their proposals for contributing to the world of
interest, numerous training initiatives have been de-     the future (see § The Community/Traditional media).
veloped regarding:
      Business and environment                            Telecom Italia’s integrated communication project,
      Environmental Management Systems                    AVoiComunicare, is active on the major social and
      Life Cycle Assessment                               environmental issues. In rst six months of 2009,
      Mobility management                                 focus was mainly on environmental topics and on
      Energy conservation and renewable energy            sustainable development, revealed by an on line
      Reduction of emissions                              survey to be priority matters for the users of the In-
      Electromagnetic pollution                           ternet site.
                   The Global Conference on Climate Change (UN             Over the years, the Group has promoted the crea-
                   COP15) was heralded and followed on a dedicated         tion of systems and instruments to ensure the ef-
                   space on AVoiComunicare, which reported on the          fective management, prevention and continuous
                   expectations and outcomes of the meetings. The          reduction of environmental impact in the area of
                   updating was carried out live by an observer on loca-   working processes. So far, the Group’s SGA has at-
                   tion and, at the end of the event, a questionnaire      tained the certi cation ISO 14001 and, at two call
                   was distributed to discover the level of satisfaction   centres in Rome and Naples, the Integrated Safety
                   (see § The Community/Social Media and Digital           and Environment System has attained the certi ca-
                   Communication).                                         tion OHSAS 18001.
                                                                              In 2009, with the issuing of a new ISO 14001
                   In collaboration with PricewaterhouseCoopers, Tele-     certi cate valid for three years, the effective applica-
                   com Italia has created the “Carbon meter”, available    tion was con rmed of the environmental manage-
                   on AVoiComunicare, to bring home how much carbon        ment of the Technology and Operations division for
                   dioxide we emit through our everyday actions and        plant engineering and industrial and civil technologi-
                   to check, through an on line tool, how and by how       cal infrastructures.
                   much we can contribute to mitigating climate change        The environmental certi cates attained or con-
                   through small changes in our behaviour. The meter        rmed during the year are given in the Customers
                   also shows how ICT solutions (video conferences,        chapter.
                   broadband connections, procurement and opera-
                   tions on line) allow the reduction of the emissions
                   and an improvement in the quality of life.

       78          Telecom Italia, moreover, has sponsored, with           As in previous years, audits of an environmental na-
   EXTERNAL        Comieco and the University of Palermo, the initiative   ture have been carried out on company departments
STAKEHOLDERS       “More and Less LAB: the future and consumption.         and outside businesses which carry out activities

 the environment   New styles of life and consumption,” organised as       that may have an impact on the environment. The
                   part of the UNESCO’s Week of Education in Sustain-      subjects covered by the audit include the veri cation
                   able Development in support of sustainability.          of respect for the legal requirements, control of the
                                                                           ful lment by businesses of the contractual clauses
                                                                           for the proper management of activities with environ-
                                                                           mental impact and checking the correct manage-
                                                                           ment of important activities (waste management,
                   Environmental Management Systems (SGA) con-             reclamation, implementation of the Integrated Envi-
                   tribute to the management, in a sustainable way, of     ronment and Safety Management Systems).
                   the production and support processes, and are a            For information on further controls carried out
                   stimulus to continuous improvement in environmen-       with the suppliers, see § Suppliers/Controls.
                   tal performance.
                           The role of a major company in the
                                countries in which it operates.

                                                                    THE COMMUNITY

                                                                      needs (young people, the elderly, the disabled                             79

                                                                      etc.), their representative associations and                            EXTERNAL
The intention of the companies of the Group is to                     non-pro t organisations in general;                                  STAKEHOLDERS
contribute to the economic wellbeing and growth of                    the institutions: local bodies (Municipalities,                       the community
the community by supplying ef cient and technologi-                   Provinces and Regions) and national and su-
cally advanced services.                                              pranational central institutions;
   Consistent with these objectives, and the re-                      University and research institutions;
sponsibilities assumed towards the various stake-                     the traditional media and the social media.
holders, the companies of the Group see research
and innovation as priority factors in growth and suc-
   Compatible with its role as a private company,
and the associated demands of a nancially ef cient           On Telecom Italia’s Internet site, the “Group’s guide-
management, the Group, in making decisions, takes            lines on voluntary contributions to the Community”(1)
into consideration the social impact of telecommuni-         are published, aimed at regulating the multiple ways
cation services, responding to the needs of even the         in which these investments may be carried out.
weakest members of society.                                        Two main areas for intervention have been identi-
   The Group looks favourably on and, where appro-            ed:
priate, supports social, cultural and educational ini-         1. voluntary activities consistent with the Group’s
tiatives aimed at the advancement of the individual                   core business (connected to the provision of
and the improvement of living conditions.                             ICT services)(2);

                                                             (1)   The complete text of the Telecom Italia Group’s Guidelines for vol-
                                                                   untary contributions to the Community is available on the Group’s
                                                                   Internet site (www.telecomitalia.it), in the section, Sustainability/
                                                                   Stakeholder/The Community.

                                                             (2)   In this chapter, only those products/services provided at no
The Community stakeholders are the following:                      charge are reported, while those which, although they have a
                                                                   signi cant impact on the Community, are provided for payment,
        civil society; all citizens and those with special         are included in the chapter, Customers.
                  2. activities aimed at the general development of         reason, in December, 2008, the Telecom Italia Foun-
                       the Community (principally, the activities of the    dation was established.
                       Telecom Italia Foundation).

                 The objectives of the interventions consistent with
                 the core business are:
                       to reduce the Digital Divide in society through
                       the dissemination of knowledge and the use           Telecom Italia identi es the projects to be imple-
                       of communication technologies among civil            mented on the basis of:
                       society, with special attention to those sec-              consultation with the stakeholders and direct
                       tors suffering discrimination for individual or            contact with the associations of civil society;
                       social reasons. Examples of activities carried             partnership projects with stakeholders and as-
                       out by the Group with this aim are Internet                sociations;
                       courses for the elderly, technological innova-             benchmarking against the other European Tlc
                       tion in schools, technology exhibitions, science           operators;
                       festivals etc.;                                            participation in industrial associations (for ex-
                       to meet the requirements and needs demon-                  ample, the London Benchmarking Group);
                       strated by the Community through the use of                sharing knowledge of the industry’s problems
                       company know-how. This includes the “SMS                   with the other departments of the Group;
                       solidarity” and other fund raising initiatives in          external lobbying in response to social emer-
                       which the Group makes available infrastructure,            gencies (for example, the earthquake in
                       customer care and other operational sectors,               Abruzzo).
      80               initiatives to develop solutions for those with
   EXTERNAL            disabilities, the sick, the elderly and minors.
 the community   Among the activities aimed at the general develop-
                 ment of the Community are initiatives and projects
                 without a direct connection with the services and          The implementation of each project passes through
                 products provided by the Group. Examples of these          four phases: planning, selection, management and
                 activities include the projects in Brazil for the social   control.
                 inclusion of children who are living in conditions          1. In the planning phase, the objectives to be
                 of degradation, initiatives in support of the ght                reached, the bene ciaries of the project, the
                 against disease, support for associations which                  timescales of the individual activities, the
                 combat organised crime, educational projects foster-             overall duration of the initiative, the methods
                 ing respect for the environment, cultural initiatives            of monitoring the project and the budget are
                 to safeguard the artistic heritage etc.)                         identi ed.
                                                                             2. The selection of the projects may take place:
                                                                                  -    through public tenders (as in the case with
                                                                                       many projects pursued by the Telecom Ita-
                                                                                       lia Foundation);
                                                                                  -    by a decision of the company, which takes
                 Telecom Italia Group has decided to give priority to                  place downstream of the consultation de-
                 those activities in which its own know-how and ex-                    scribed above, consistent with the guide-
                 pertise can give added value to the Community.                        lines for voluntary contributions to the
                    Notwithstanding this, as a major company, Tel-                     Community.
                 ecom Italia cannot shirk from supporting important          3. The management of the properly selected
                 social causes, even if remote from its own busi-                 projects takes place in partnership or within
                 ness. Indeed, it has always supported initiatives                the framework of agreements. Sometimes
                 aimed at meeting the needs of society and, for this              cash disbursements are made, leaving the
      management of the activity to the bene ciary       the guidelines of the London Benchmarking Group
      organisation/association.                          (LBG), amounted to 36.5 million euros (36.3 million
  4. The current monitoring system provides ex-          euros in 2008), which is the equivalent of 1.09% of
      post control, customised to the speci cs of        the Pre-Tax Pro ts.
      the individual projects. In tenders put out by        The calculation of the contributions was carried
      the Telecom Italia Foundation, for the selection   out using management data, in part based on esti-
      of projects, one of the prerequisites of entry     mates. In accordance with the principle of materi-
      is the existence of a control system, which in     ality, only those subsidiary companies have been
      turn constitutes one of the assessment pa-         included in the consolidated accounts with revenue
      rameters of the projects presented. Indeed,        greater than 300,000 euros and more than 40 em-
      the Committee for Internal Control and Corpo-      ployees, excluding discontinued operations/non-cur-
      rate Governance, composed only of independ-        rent assets held for sale.
      ent Board Members, conducts control actions           More than 100 major international companies
      on the sustainability activities in general, and   subscribe to the LBG, which was founded in 1994
      on the projects carried out by the Telecom         and represents the gold standard at the global level
      Italia Foundation, in terms of consistency with    in the classi cation of voluntary contributions by
      the ethical values of the Group.                   companies in favour of the Community.

                                                         In line with the LBG model, in order to measure and
                                                         represent the Group’s commitment to the Commu-
                                                         nity, the contributions paid out have been subdivided
                                                         into three categories (Charity, Investments in the
 Contributions made by the Telecom Italia Group to       Community, Initiatives for the Community), adopting                      81

 the Community during 2009, calculated according to      the usual pyramid diagram:                                        EXTERNAL
                                                                                                                             the community

                                                         THE COMMUNITY BY TELECOM ITALIA GROUP

                                                                  investments in
                                                                  the community
                                                                                investments in
                                                                  42.9%         the community
          1.5                                                                    42.9%

       investments in
       the community      15.7
                         investments in
                         the community

        initiatives in
       the community      19.3
                          initiatives in
                         the community                                                       initiatives in
                                                                charity                      the community
36.5 milion euros                                               4.1%           charity        53.0%         initiatives in
                                                                                                            the community
        36.5 milion euros                                                      4.1%                           53.0%
                 The criteria used to assign the contributions to the        The dissemination of ICT in schools
                 various levels of the pyramid now follow.                   Telecom Italia has signed a Protocol of Understand-
                                                                             ing with the Minister of Education, Universities and
                                                                             Research (MIUR) for the dissemination of ICT in
                                                                             schools, with the objective of assisting young people
                  Criteria                                                   in the use of new technologies and promoting their
                  Intermittent support to a wide range of good causes        use for educational purposes. The partnership en-
                  in response to the needs and appeals of community
                  organisations, increasingly through partnerships           visages both the de nition of speci c offers of price
                  between the company, its employees, customers and          reductions and ease of payment for the acquisition
                                                                             of Tlc products and services and the development of
                  Kind of contributions
                                                                             research plans to improve the teaching and learning
                  Donations to national/international organisations not
                  based on a speci c medium/long term programme.             process. The agreement also provides for the reali-
                  Sponsorship of causes or events, not part of a
                                                                             sation of cultural and educational initiatives aimed
                  marketing strategy.
                  Company matching of employee giving and fund-raising,      at increasing the awareness of young people about
                  Costs of supporting and promoting employee involve-
                  ment.                                                      issues connected with environmental sustainability,
                  Costs of facilitating giving by customers and suppliers.   bullying and the safe use of the network.

                                                                             Internet Saloon
                                                                             The objective of the initiative, launched in 2000 in
                  Long-term strategic involvement of the company to          partnership between the Association for Metropoli-
                  address a limited range of social causes.
                                                                             tan Interests of Milan and the Telecom Italia Com-
                  Kind of contributions                                      pany, Gruppo Credito Valtellinese, HP and Microsoft,
      82          Memberships and subscriptions.                             is to support the dissemination of the Internet and
   EXTERNAL       Grants and donations based on a speci c medium/            new technologies among people over 50. The basic
                  long term programme.
STAKEHOLDERS                                                                 Internet courses, run by university students, last a

 the community    INITIATIVES IN THE COMMUNITY                               day and are set up in a way that anyone, even with-
                                                                             out any knowledge of personal computers, can navi-
                                                                             gate the Internet and use emails after a few hours
                  Activities in the Community usually by commercial
                  departments to support directly the success of the         of lessons. Currently, Internet Saloons are active in
                  company, including in partnership with humanitarian        Milan, Sondrio, Pavia and Catania and have recently
                                                                             been opened in Ancona, Bari and Naples. In nine
                  Kind of contributions
                                                                             years of operation, more than 35,000 people have
                  Sponsorship of events, publications and activities
                                                                             successfully attended courses.
                  promoting brand or corporate identity.
                  Cause Related Marketing, promotional sales.
                  Support to scienti c and University research and to
                  philanthropic organisations.
                  Care for consumers with special needs.                     This initiative, set up in partnership with the Digital
                  Civil Protection activities.
                                                                             World Foundation, provides for the establishment
                                                                             in Rome of 180 courses in digital literacy and wide-
                                                                             spread territorial dissemination aimed at the over
                                                                                The basic course are conducted in the digital lec-
                                                                             ture theatres of 60 Roman schools and are run by
                 Initiatives consistent with the core business               selected students, who, through this commitment,
                 By way of example, some activities carried out in           obtain scholastic training credits.
                 2009 are given below, concerning initiatives to re-            In parallel, Telecom Internet Corners have been
                 spond to the needs of the Community using the               set up in 50 Social Centres for the Elderly of the
                 technologies that underlie the provision of services        Municipality of Rome: welcoming, homely places
                 by Telecom Italia.                                          when the elderly can put the expertise acquired into
                                                                             practice and, thanks to the experience of the central
granny-tutor gures, introduce their peers to new                             Safe navigation
technologies.                                                                The projects is based on a twice yearly course
      In the two years, 2009-2011, a total of more                           aimed at making children, young people and adults
than 17,000 elderly people are expected to have                              (parents and teachers) aware of how to use the
taken part in the initiative.                                                Internet and digital technologies sensibly and re-
                                                                             sponsibly. The initiative has its own dedicated site
Future Centre                                                                (www.navigaresicuri.org) and is aimed at the various
This is a study centre of excellence launched in                             interlocutors using appropriate language and tools,
continuity with the San Salvador Centre for Eco-                             including an illustrated handbook and publications
nomic Studies in Venice, founded at the end of the                           signed by the character of Geronimo Stilton for the
eighties, which has brought together the study of                            young ones, circulated materials and interactive
technological evolution with economic issues, and                            experiences for adolescents, information and a spe-
how this in uences the operation of the market. The                          cialised assistance service for adults.
activities of the Future Centres hinge on disseminat-                           The project takes advantage of the collaboration
ing education on new telecommunications technolo-                            and injection of expertise, authority and reliability of
gies and the study of the impact and changes that                            the Fondazione Movimento Bambino, Save the Chil-
telecommunications are bringing to all aspects of                            dren and Atlantyca, copyright holder of the character
our lives.                                                                   of Geronimo Stilton.
                                                                                The project also has the objective of drawing up
Fund raising                                                                 a Code of self-regulation for the protection of minors
Technology often assists in the collection of funds.                         on the web, updating the Treviso Charter of 1990.
Indeed, the ease, immediacy and simplicity of the
tools made available by Tlc services have allowed                            TIM Mobile Care                                                  83

more direct appeals to the generosity of people and                          Developed with the National Organisation for the              EXTERNAL
made making donations easier. Fund raising has                               Protection of the Deaf (ENS), “TIM Mobile Care” is         STAKEHOLDERS
taken on particular importance above all in cases                            a multimedia video assistance service which allow           the community
of unexpected, immediate and urgent need in the                              non hearers to receive, free of charge, in Italian
Community.                                                                   Sign Language, all the necessary information to use
      For years, Telecom Italia has supported impor-                         mobile telephone services (for example, con guring
tant humanitarian causes, including through innova-                          emails, SMS/MMS, remaining credit, tariff pro le
tive ways of making donations. In addition to SMS                            etc.). Internet navigation services are also available
and telephone solidarity, “Click solidarity” has been                        on mobile handsets which use voice recognition
available since 2007, a new tool that allows dona-                           technologies, voice synthesising and audio stream-
tion via the web, with direct deductions on the Alice                        ing in order to customise various information serv-
ADSL bill.                                                                   ices (tourism, entertainment etc.) for use by those
      Telecom Italia is among the organisers of the                          with visual and auditory disabilities.
  rst telephone prize competition in support of scien-
ti c research aimed at beating diabetes.                                     TIM Mobile Speak
      The money raised was passed on in its entirety,                        Launched in collaboration with Loquendo (a Group
without any deductions, either by the tax authorities,                       company) and the Italian Association of the Blind
who, thanks to an awareness campaign mounted by                              and Visually Impaired, “TIM Mobile Speak” is a
Tlc companies and non-pro t organisations, have ex-                          more developed version of “TIM Talks”. This is a
empted such operations from the application of VAT,                          software application that allows the blind, visually
nor by the company for the disbursement of its costs.                        impaired and the elderly to use all the functions of
      In 2009, 99 fund raising events were organised                         mobile phones thanks to an electronic voice that
with a total collection of around 27 million euros .                  (1)
                                                                             reads out the contents of the display, depending on
                                                                             the requirements and instructions of the user.
                                                                                As “TIM Talks” was in the past, “TIM Mobile
(1)   The amount collected is not directly attributable to the initiatives
      mentioned due to the time lag between invoicing and payment.           Speak” is also available free of charge, by obtaining
                 a new, compatible handset at TIM/Telecom Italia’s        Inclusion project was a nalist in the 2009 edition
                 major sales outlets.                                     of the Sodalitas Social Awards.

                 The Solidarity Ponies                                    Telecom Italia Future Lab
                 This initiative was launched in 1997, in collabora-      This is a laboratory staged in Genoa from Octo-
                 tion with the Social Policy Departments and several      ber 23rd to November 1st as part of the Festival
                 of the largest voluntary associations in six major       of Science in which it was possible to try out new
                 Italian cities (Milan, Turin, Bologna, Rome, Naples      applications of digital technology and their impact
                 and Palermo). Its objective is to supply free assist-    on daily life. A voyage through technology in which
                 ance in the home to people over 65. The elderly can      visitors could discover the many faces of “digital
                 call a telephone number to ask for help of various       potential”, that is, the many small revolutions that
                 types (assistance, companionship, accompanying           the technologies can bring in terms of the worlds of
                 etc.). The Municipality operators, connected to an       relationships, safety, health, work, knowledge, travel,
                 operational centre, pass on calls from the mobiles       respect for the environment and natural resources.
                 of volunteers who promptly take action. In addition      Among the most popular programmes being tried
                 to supplying the technical tools, Telecom Italia con-    out were the 3D video chat, e-learning, interactive
                 tributes to the initiative by nancing the non-pro t      infomobility (for the real time acquisition of informa-
                 associations that take part in the project in order      tion useful for improving the travel experience), user
                 to create and run, through the work of volunteers,       generated digital art (artistic creations on digital
                 the social assistance network. In 2009, more than        media), MyDoctor@home (for the remote control of
                 37,000 interventions were carried out.                   certain types of diseases), Mobile Payment (for us-
                                                                          ing a SIM card as a dynamic and secure payment
      84         Smart Inclusion                                          method).
   EXTERNAL      The project, entirely supported and sponsored by            From January 13th to 17th, 2010, Telecom Italia
STAKEHOLDERS     Telecom Italia, is aimed at reducing the discom-         Future Lab was also staged in Rome, again as part

 the community   fort of hospitalised children and maintaining their      of the Festival of Science.
                 contact with school. Through the installation of a
                 “Smart Care” touchscreen terminal at every bedside       Social initiatives
                 in certain wards of the Ospedale Sant’Orsola-Mal-        Interventions for the general development of the
                 pighi of Bologna and a teleconference and remote         Community in terms of charity are carried out by Tel-
                 teaching system at the Irnerio middle school of          ecom Italia Foundation and, to a lesser degree, by
                 Bologna, a technological bridge has been formed          other arms of the Group.
                 between the place of hospitalisation and the place
                 of education. The child patients, thanks to sophisti-    The Telecom Italia Foundation
                 cated tools, can actively take part in school lessons,   The Telecom Italia Foundation, established at the
                 study recordings of missed lessons, complete ex-         end of 2008, is one of the main Corporate Social
                 ercises and use individual courses of self-learning.     Responsibility instruments of Telecom Italia re-
                 Moreover, the children can communicate with their        garding the Community. Through its initiatives, the
                 loved ones through video calls and access various        Group’s commitment to support the communities in
                 entertainment programmes (cartoons, lms, docu-           which it operates is strengthened, promoting ideas
                 mentaries and sport). The medical staff can use          and projects designed to improve people’s quality of
                 the system to display all the clinical les of patients   life. In particular, the Foundation is active:
                 with the option of updating them. Smart Inclusion              in the social eld, developing educational and
                 has also been extended to Rome’s Ospedale Pedi-                support projects dedicated to the vulnerable
                 atrico Bambino Gesù and the Azienda Ospedaliera                and disadvantaged categories and bands of
                 in Padua and will become operational at the Azienda            the population;
                 Ospedaliera Meyer of Florence and, soon, it will               in developing projects dedicated to education,
                 also be extended to the hospitals S. Anna of Turin,            training and scienti c research;
                 Gaslini of Genoa and S. Matteo of Pavia. The Smart             in protecting artistic and historical heritage,
      through innovative ways and means of enjoying              netelecomitalia.it), expiring on September
      and disseminating knowledge.                               16th, 2009:
                                                                  -   The “Work and Social Inclusion” tender,
The Telecom Italia Foundation is a business foun-                     through which six projects to nd stable
dation of a predominately distributive kind, with a                   and quali ed work for disadvantage people
management fund tied to the pro tability of the Tel-                  will be nanced.
ecom Italia Group. This fund, in 2010, is expected                -   Educational and new technologies tenders,
to be equal to 0.5 per thousand of the consolidated                   through which two projects to disseminate
EBITDA, 2009. Telecom Italia Foundation’s action                      digital technologies in schools, and to
plan is de ned annually and approved by the Board                     stimulate education through the creation
of Directors, which draws on the support of a Scien-                  and delivery of multimedia and interactive
ti c Direction Committee, made up of experts in the                   lessons, will be nanced.
various elds of intervention.                                    St Francis of Assisi Wood; is an educational
   In order to guarantee maximum transparency in                 project carried out with the FAI as part of the
the decision-making processes within the Founda-                 operations to recover the St Francis of Assisi
tion, a programme of stakeholder engagement was                  Wood, with the objective of making children,
launched in 2009, with the support of authoritative              young people and adults aware of the need
experts from outside the Foundation in the process               to respect and protect the environment and
of analysis and de nition of possible initiatives and            landscape.
projects in the “historic-artistic heritage” eld. This           Theatre on the ward: in the paediatric wards
involvement has shown itself to be an important in-              of certain important Italian hospitals, young
strument in better understanding the dynamics and                patients are entertained with the vision of the
opportunities which open up for interventions in sup-            theatrical performances of the Teatro Antoni-            85

port of this heritage, in harmony with the Founda-               ano, thanks to ADSL connections. It is an initi-      EXTERNAL
tion’s mission.                                                  ative run in partnership with Antoniano Onlus.     STAKEHOLDERS
   The Foundation’s projects are monitored on the                                                                    the community
basis of the speci c characteristics and objectives         Other social initiatives of the Group
envisaged. The monitoring system is a require-                   Dynamo Camp: Telecom Italia is a founder
ment built into the Foundation’s tenders and repre-              member of Dynamo Camp, the rst camp pur-
sents one of the prerequisites for admission of the              pose built to host, at no charge, children suf-
projects, in addition to an assessment parameter.                fering from serious and chronic diseases dur-
                                                                 ing treatment and in the post-hospitalisation
The projects pursued by the Telecom Italia Founda-               period. Here, in December, Telecom Italia car-
tion in 2009 are shown below.                                    ried out the rst initiative of corporate volun-
      Dyslexia Programme: this has been organised                teering (for further information, see § Human
      with the Italian Dyslexia Association as a mul-            Resources/People Caring).
      tifaceted programme of interventions, within               Telecom Italia and the ght against ALS: Amyo-
      the framework of an agreement signed on July               trophic Lateral Sclerosis (ALS) is a rare, seri-
      15th, 2009, for three scholastic years.                    ous progressive neurodegenerative disease.
      Earthquake in Abruzzo; the Telecom Italia Foun-            To contribute to the ght against ALS, Telecom
      dation made of donation of 200,000 euros                   Italia:
      to the Civil Protection, and allocated 1 million            -   has donated 40 computers to the asso-
      euros for a project to restore the cultural herit-              ciation, Viva La Vita Onlus, for the same
      age of the library of L’Aquila, which will be digi-             number of ALS sufferers for whom ICT
      tised and archived on computer, to be returned                  technologies are a vital factor, represent-
      within a short term to the citizens.                            ing the only way they can continue to com-
      Telecom Italia Foundation Tenders: in June,                     municate with the world around them;
      2009, the Telecom Italia Foundation published               -   on September 7th, 2009, at the San Siro
      two tenders on its website (www.fondazio-                       stadium in Milan, together with the Milan
                     Foundation, a football match was organ-             nations by SMS from mobile phones and
                     ised with part of the proceeds going to the          xed-line calls;
                     Viva La Vita Onlus association, and part        -   the donation to the University of L’Aquila
                     to the Stefano Borgonovo Foundation as a            of 2,000 USB sticks for connecting to the
                     contribution to research.                           Internet on the move, with 100 hours a
                 Music in schools: the project, launched in              month for four months of free traf c to
                 2003 as a collaboration between the Group’s             allow students to continue with their edu-
                 mobile companies in Latin America and the               cation;
                 Brazilian government, is designed to promote,       -   the delivery to welcome centres select-
                 through musical education, the social inclusion         ed by the Civil Protection of 150 mobile
                 of young children and adolescents who live in           phones, to be used at no charge as “pubic
                 at-risk situations in 13 Brazilian cities. During       telephones”;
                 the music courses, notions of civic responsibil-    -   the creation of Internet points enabling
                 ity and peaceful co-existence are disseminat-           free Internet navigation;
                 ed. In many cases, the musical knowledge ac-        -   free top-ups of 10 euros, sent via SMS to
                 quired has smoothed the way for participants            the 340,000 customers in the area of the
                 into the world of work.                                 earthquake of April 6th. A caring campaign
                 To date, 20,540 students from 62 public                 was carried out until April 26th, which pro-
                 schools have bene ted from the project.                 vided further credit where needed;
                 Libera: again in 2009, Telecom Italia has sup-      -   the distribution of 2,200 telephone cards
                 ported the activities of the Don Luigi Ciotti           that could be used at mobile Public Tele-
                 association, which is engaged with issues of            phone booths, located on the instructions
      86         legality and stands against organised crime             of the Civil Protection;
   EXTERNAL      and the ma a, through the recovery of lands         -   the activation of TIMinCASA Abruzzo, a
STAKEHOLDERS     that are con scated and then assigned to                service that allows the transfer of xed-

 the community   young people’s cooperatives for the produc-             line home numbers to mobile phones,
                 tion of agricultural produce (oil, wine, pasta          thereby receiving calls to the xed line
                 and other produce). This produce was made               number free of charge;
                 up into 9,000 parcels that Telecom sent out         -   the donation of 1,000 personal computers
                 as Christmas presents. Telecom has also con-            to the University of L’Aquila;
                 tributed to creating educational courses on         -   the donation to students of the Casa dello
                 legality in schools and universities, collaborat-       Studente of 26 personal computers, un-
                 ing with national and local business organisa-          der the guidance of the Presidency of the
                 tions (Con ndustria) to ght the phenomena of            Republic;
                 the ma a. The project has been running since        -   the distribution of 2,000 TIM mobile
                 2000.                                                   phones with 5 euros of traf c at popula-
                 Earthquake in Abruzzo: in addition to what              tion reception points; tents, hospitals,
                 is reported under the activities of the Tel-            hotels etc. A further 1,000 handsets
                 ecom Italia Foundation, the Group has greatly           (complete with SIM card and 5 euros of
                 helped, and continues to help, people involved          traf c) and 10,500 top-ups of 20 euros
                 in the earthquake. Among the initiatives car-           have been distributed, in coordination with
                 ried out so far:                                        the Ministry of Economic Development and
                 -   the creation, through in-company fund-rais-         other mobile phone operators;
                     ing, of a fund of around 250,000 euros (in-     -   construction of modern bre-optic infra-
                     cluding the contribution of 100,000 euros           structure, making telecommunications
                     made available by Telecom Italia) which             services and broadband connections
                     colleagues affected by the earthquake may           available for all the new homes under the
                     use for personal needs;                             C.A.S.E. (Sustainable and Eco-compati-
                 -   the activation of the 48580 number for do-          ble Anti-siesmic Complexes) project, with
          the free activation of telephone lines and     cals, radio, TV and web) are potential stakeholders.
          ADSL connections in the event of removals      In addition to telephonic contact, mailing lists are
          and new equipment;                             created ad hoc for the different information chan-
      -   the completion, by the end of 2009, of the     nels at times of public meetings or presentations
          ultra-broadband network platform (NGN)         of products/services, based on a close analysis
          for connections up to 100 Megabits a           of the entire panorama of Italian and international
          second;                                        journalism.
      -   free transfers and take-overs of usage;           The results of the activities of the press of ce
      -   staggered payment of bills for mobile sub-     are periodically monitored by a research company.
          scription customers, xed network custom-       In particular, the visibility of articles mentioning
          ers and commercial partners operating          Telecom Italia and its products and services are
          on site;                                       analysed on a monthly basis, making comparisons
      -   the suspension of actions against custom-      against a standard consisting of a medium length
          ers in arrears in Abruzzo, both for xed        article published on an entire page of a title of
          network services and for mobile network        average diffusion, without pictures and by-line. By
          services;                                      giving each article examined a positive or negative
      -   the sending of two Telecom Italia mobile       value, according to whether it expresses facts and
          homes to the tent cities for on-site assist-   opinions for or against the Company, an Index of the
          ance for the population.                       Quality of Visibility (IQV) is arrived at. On the basis
                                                         of this analysis, Telecom Italia has twice the global
                                                         visibility of its competitors. Comparing the quali-
                                                         tative data with that for the year 2008, within an
                                                         overall framework of reference that is deteriorating            87

Involvement through the press of ce                      slightly, Telecom Italia is the only operator which, in      EXTERNAL
The involvement of the media takes place mainly          2009, recorded a signi cant improvement in its IQV        STAKEHOLDERS
through the press of ce, through the sending of          (+20%).                                                    the community
press releases, the organisation of interviews of the
management, interaction with journalists and press       Involvement through the Group’s website
staff, the organisation of press conferences and the     The corporate site of Telecom Italia (www.telecomi-
presentation of products and services. Where pro-        talia.com) is the point of on line access to the
vided by the current regulations, the nancial mar-       commercial, service and institutional content of the
kets and their supervisory bodies of those markets       Group. The key stakeholders are:
are also involved in the communication activities.             the general visitor interested in nding out
   In carrying out its activities, the press of ce             about the company and/or Telecom Italia’s of-
follows the Group’s speci c procedure for the man-             fers: the home page is dedicated to them, act-
agement and communication of information and                   ing as hub directing them to the institutional
privileged data, which governs the internal manage-            content or to various commercial sites, accord-
ment and external communication of documents                   ing to their requirements;
and information regarding the Company and de nes               customers or potential customers who wish to
the operational methods for communicating price                 nd out about the provisions and promotions
sensitive information to the market (the procedure             of the Group; the Private and Business chan-
is available on the website, www.telecomitalia.it, in          nels are dedicated to them, subdivided by the
the Corporate/Governance/System of Governance/                 type of public and nature of the offer;
Codes, principles and procedures section).                     customers who wish to nd areas for dialogue
   Communication with the media takes place both               with the company and/or who need support
on a spontaneous and proactive basis, and in re-               and assistance: the channels Parla con noi
sponse to the speci c requests of journalists. For             and Info & Assistance are dedicated to them,
the press of ce of the Telecom Italia Group, all the           with different types of channels of contact for
media (press agencies, daily newspapers, periodi-              private, business and institutional customers;
                       researchers and scholars interested in nding       blogs dedicated to speci c programmes.
                       out more about the Group and its innovations;         MTV, which is aimed at a young public, does
                       institutional and retail investors, analysts and   not use Auditel but instead creates speci c focus
                       bondholders, both Italian and international;       groups to assess and formulate the programmes.
                       the ethical funds;                                    Among the most appreciated programmes are
                       people looking for work;                           the information services (particularly TG La7).
                       journalists.                                          The editor is responsible for the broadcast con-
                                                                          tent and is therefore the guarantor of respect for the
                 There is a dedicated section for each part of the        regulations, including independence, press freedom
                 public, with content and in-depth material to meet       and journalistic expression. Furthermore, the mem-
                 their speci c needs. Various methods are provided        bership of the journalists of a speci c, professional
                 to give and receive feedback.                            body determines their rights and responsibilities.
                    Particular attention is paid to web ranking and
                 classi cations which allow comparison with what          La7 and MTV have always been committed to the
                 has been created by competitors. On the basis of         promotion of social issues. Some examples of ac-
                 these indications, the site is continuously updated,     tivities undertaken in 2009 are given below:
                 enriched and modi ed with new content and func-               free access to the programme schedule of La7
                 tionality of ever greater interest to the users.              to Save the Children and Unicef (space taken
                    In 2009, Telecom Italia achieved the following             from the advertising pool) and free access for
                 placings:                                                     the representatives of these organisations to
                       second in Italy for the communication of sus-           certain TV programmes;
                       tainability through the institutional website in        La7 has decided to give away a kit to the peo-
      88               the “CSR Online Awards,” in the classi cation           ple in the areas in which Save the Children
   EXTERNAL            of on line communication of Corporate Social            operates instead of Christmas presents to its
STAKEHOLDERS           Responsibility, managed by the nancial com-             staff, who received a token marking the dona-

 the community         munication company Lundquist, in collabora-             tion made on their behalf;
                       tion with the economic- nancial daily, Il Sole          La7 dedicated an evening’s transmission
                       24 Ore;                                                 to the Copenhagen Conference on Climate
                       third in Europe in the Hallvarsson&Halvarsson           Change.
                       (H&H) “Webranking Europe 500”, which gives              MTV broadcast two specials entitled “MTV 4
                       awards for the best corporate sites of the ma-          Peace,” a project carried out in collaboration
                       jor listed companies on the basis of the qual-          with the 9th World Summit of Noble Peace
                       ity, transparency, richness and effectiveness of        Laureates and Kids’ Rights, in which several
                       the on line institutional and nancial commu-            young people were given the chance to meet
                       nication;                                               some of the most famous winners of the No-
                        fth in Italy in the same national H&H classi -         bel Price for Peace and question them on how
                       cation for communication through institutional          to build a better world;
                       websites.                                               MTV launched a fund-raising campaign for the
                                                                               earthquake in Abruzzo, in collaboration with
                 Involvement through the Group’s broadcast stations            the Ministry for Youth, with the broadcasting
                 Through TI Media, the Group controls the televi-              of 3 spots in support of the reconstruction of
                 sions broadcast stations La7 and MTV. In order to             structures for young people. A television spe-
                 select the programmes to be made, a dedicated of-             cial was also broadcast of the concert “Wom-
                  ce conducts regular market research on the needs             en for Abruzzo,” which was held at San Siro on
                 of current and potential audience. La7, whose                 March 21st.
                 programmes are aimed at a mainly adult, culturally
                 aware public, measures the satisfaction and enjoy-       In addition, the following campaigns have been con-
                 ment of the choices in the programme schedule            ducted:
                 mainly through Auditel and, additionally, through the         The planet we will become: the campaign, on
     the occasion of the World Environment Day or-      subjects of the new Internet (young talent, entrepre-
     ganised by the United Nations, involved the tel-   neurs, early web adopters, research centres, incuba-
     evision platforms La7 and Alice Home TV from       tors and nanciers, universities, institutions, hi-tech
     the end of May to the beginning of June. On        companies), opinion leaders (bloggers and journal-
     the La7.it website, the initiative “Your promise   ists) and private and public subjects who represent
     to safeguard the future climate” and an ad hoc     the engine of innovation in our country and who can
     publicity campaign were conducted, running to      stand for and safeguard the criteria of sustainability,
     the end of the year.                               based on the expected development, as well as the
     Road Safety Messages: this is an initiative        traditional stakeholders (customers, suppliers and
     in collaboration with the Ministry of Educa-       institutions).
     tion, aimed at the television audience of the
     Superbike championship and the world of two        Objectives and strategies of stakeholder involvement
     wheels, with the aim of increasing awareness       The strategy of involvement is developed around
     of proper, responsible driving. The campaign       the new dimensions of the conversation in the 2.0
     involved all the TI Media Group platforms from     world, through the positioning of Telecom Italia on
     April to November 2009, with dedicated televi-     the new Internet with the aim of creating a digital
     sion programmes and the publication on the         ecosystem, through:
     La7.it site of informative articles, clips and           the development of projects according to the
     competitions aimed at bloggers, which saw the            latest updated standards of web 2.0, thanks
     participation of 2,500 people.                           also to active contributions to the ecosystem;
                                                              the involvement of the opinion leaders through
The awareness campaign launched on La7 and Alice              the creation of communication initiatives on
Home TV individually reached more than 20 million             and of ine;                                                89

television viewers. The respective support campaign           the extension of events to the mass media               EXTERNAL
on the Web reached more than 10,000 individual                and the Network, to create a more general            STAKEHOLDERS
users overall.                                                cross-media link-up between environments, tra-        the community
                                                              ditional media and social networking;
                                                              constant monitoring of the feedback from the
                                                              social media and the respective KPI.

Social media means the on line technologies and         Projects
practices that users adopt to share words, pictures,    The projects launched and developed in 2009 are
video and audio content. Through the social media,      shown below.
a merger takes place between sociology and tech-              Working Capital: backing the ideas put forward
nology, and the type of conversation it gives rise to         to support Italian innovations and entrepreneuri-
ranges from a form of monologue (by one person to             al initiatives in the web 2.0 environment, supply-
many) to one of dialogue (by many to many). People            ing expertise, technologies and services in sup-
are thereby transforming themselves from content              port of their realisation and helping the growth
users to editors and generators of content. The               of a new generation of Italian entrepreneurs.
dominant feature is no longer simply exploring, but           The initiative takes place on the Internet, but
interacting and doing.                                        also involves a series of meetings (barcamps)
   The popularity and wide availability that the so-          with aspiring young entrepreneurs and authori-
cial media have achieved is such that companies               tative guests, which are rolled out across the
cannot underestimate the effects on their busi-               entire national territory.
nesses.                                                       Venice Session: conversation platform which
   Telecom Italia has identi ed the need to launch            involves the stakeholders of innovation on a
a true dialogue with its stakeholders, bringing to-           national and worldwide scale, in order to un-
gether its traditional and innovative communication           derstand the changeable and complex realities
channels: the Italian social community, the emerging          of the present, historic scenario and build the
                 future narrative. Entrepreneurs and writers, phi-      talent of all the internauts who are expressing
                 losophers and scientists, artists and journalists      their creativity on the web.
                 explore the future by interrogating each other         AvoiComunicare (www.avoicomunicare.it):
                 on the country’s needs; recounting experienc-          this is a project created by Telecom Italia to
                 es, visions and projects becomes a method of           encourage an open discussion on issues of
                 research, capable of bringing together different       great importance: environment, sustainable
                 cultures in a shared journey. Following the con-       development, biodiversity, possible equilibri-
                 ference, held at Telecom Italia’s Future Centre in     ums between different worlds and cultures,
                 Venice and transmitted by direct streaming and         integration, building peace through familiarity
                 live blogging on the Internet, written reports and     and reciprocal listening.
                 video were published on the website and the            The blog, launched in September, 2008, be-
                 project blog, and also disseminated on the lead-       gan by dealing with the issues of integration
                 ing, most visited social networks.                     between different cultures and ethnic confron-
                 Jpeggy: this is the project that promotes Ital-        tation, with the support of outstanding testi-
                 ian photographic talent and, with the support          monials (such as Mikail Gorbachev, Joaquín
                 of Amaci (Association of Italian Contemporary          Navarro-Valls, Tara Gandhi, Tahar Ben Jelloun
                 Art Museums) and a group of exceptional cura-          and Bob Geldof). Since the early months of
                 tors, it uses the Internet as a tool for bringing      2009, AvoiComunicare has been focusing on
                 together and displaying works or art. Access to        the issue closest to the heart of the commu-
                 the Internet as a platform for distribution and        nity: the environment and sustainability in the
                 publication has allowed talent to emerge that          fullest sense, decisive factors in safeguarding
                 would not otherwise have been seen. Jpeggy             the future of the planet. The issue was chosen
      90         recreates on the Internet the process of visual        by the users themselves in an on line survey.
   EXTERNAL      artistic selection and production, and allows          In November, the World Conference of Science
STAKEHOLDERS     the “long queue” of Italian photographic talent        for Peace was featured on the pages of avoi-

 the community   to emerge and become involved in the artistic          comunicare with a variety of activities, includ-
                 conversation.                                          ing direct on line streaming and video inter-
                 Ustation: this is the 2.0 medium for the universi-     views. In December, the return to focusing on
                 ties’ web radio and TV, insofar as it acts as a        the environment arose spontaneously thanks
                 catalyst of the content generated by them. La7         to the UN summit in Copenhagen, and a blog-
                 has a television format (already on air) which, in     ger was sent to Copenhagen to cover the
                 its turn, incorporates the content of Ustation. In     agenda and carry out ad hoc video interviews.
                 this way, the Italian student population has at        AvoiComunicare interviewed experts and wit-
                 its disposal an innovative instrument of informa-      nesses – including Jeremy Rifkin, Giovanni
                 tion which completely revolutionises the genera-       Soldini, Stephen Schneider, Carlo Petrini, An-
                 tion of formats by introducing a new, reverse          tonino Zichichi, Bjørn Lomborg, Colin Campbell
                 pathway: from the Internet to TV.                      and Mario Tozzi – on topics such as pollution,
                 Digital capital: this is a project for the diffusion   the climate and renewable energy, but also
                 of digital culture focused on the city of Rome,        talked to ordinary people involved in safe-
                 with meetings and events that have seen the            guarding the environment and in research into
                 participation of national and international rap-       new solutions; it also hosted many bloggers
                 porteurs who summarise the changes underway,           who deal with environmental issues on their
                 bringing together the different environments and       sites.
                 cultures that operate in the capital and which         In November, AvoiComunicare was awarded
                 already, each through their own projects, dem-         the “Areté” prize for responsible communi-
                 onstrate today the ecosystem of tomorrow.              cation in the Internet category, promoted by
                 Roma Europa Web Factory: a web community               Pentapolis, an association for the diffusion of
                 dedicated to multimedia artists, a creative work-      Corporate Social Responsibility.
                 shop aimed at drawing in and promoting the
Results                                                  universities (in addition to the 30 already underway
The projects, all non-pro t making, were carried out     since the beginning of 2009), covering research into
in collaboration and partnership with the emerging       new technologies, encryption algorithms, service
players in the media and the digital culture, and with   concepts and new paradigms of communication.
leading subjects in the respective elds of innova-          Activities to enhance and generate competi-
tion.                                                    tive advantage for Telecom Italia Group have been
   Active networks and communities involved in           pursued through a strategic management of the
the Social Media have been created with more than        relationship between research, Intellectual Property
10,000 direct connections and over 200 interac-          Rights (IPR) and business, aimed at the develop-
tions every day. Direct streaming media have attract-    ment of the company’s assets in patents rights; in
ed 2,000 hits, with a peak of 3,600 for the Venice       this context, during 2009, 20 new applications for
Sessions IV event. More than 18,000 pictures from        patents were registered.
over 1,500 photographers have been posted on the            The main activities carried out by TILab are:
Jpeggy platform.                                              the creation of services in the iPhone environ-
   Through the Working Capital project, 6,000 as-             ment, in particular, access to information and
piring web 2.0 entrepreneurs have been involved               multimedia content in the area of value added
and relationships have been established, and later            services (VAS). As part of this, version 2.0 of
consolidated, with the leaders in digital innovation          the Virgilio portal was successfully launched,
and in uential Italian gures in the sector, especially        enriched with maps and local content;
journalists and bloggers with expertise in innovation.        the start of experimentation with innovative -
   AvoiComunicare has been followed by around 1               bre cabling solutions inside buildings (Fibre to
million individual users during 2009, with a total of         the Home – FTTH). Its outstanding character-
almost 2,5 million pages viewed. The projects has             istic is that it can be used without having any           91

progressively opened itself up to the realities of the        impact on the existing infrastructure;                 EXTERNAL
Network, inaugurating a fan page on Facebook, now             the start of engineering and deployment op-         STAKEHOLDERS
followed by 11,500 fans, and a channel on YouTube             erations on 200 exchanges of the Kaleidos            the community
which has clocked up more than 41,000 video view-             system for energy ef ciency (see § The Envi-
ings. More than 4,500 individual users watched ‘For           ronment/Environmental performance). Instal-
Peace Live’, live from the Piccolo Teatro.                    lations have been created to test the results
                                                              of energy ef ciency measures at business
                                                              an innovative air condition system was devised
                                                              and tested in TILab’s test plants for the central
Telecom Italia Group’s research and development               environments called Extraction and Full Free
activities are carried out by TILab, by the Opera-            Cooling (EFFC). This solution is able to refresh
tional Units and businesses (Networks, Marketing,             the environment with an energy saving greater
Information Technology, Security) and by the Group’s          than 80% compared to traditional systems,
companies.                                                    without the use of synthetic uids banned by
   TILab is the Technology and Operations Depart-             the Kyoto protocol. Given the positive results
ment’s structure for overseeing the Group’s tech-             of the tests, the technique has been extended
nological innovation, scouting out new technolo-              to around 400 operational centres;
gies and carrying out the engineering operations              the launch, in partnership with the Miroglio
for the services and network platforms, through               Group, of the rst initiative at national level of
a network of strategic partnerships with the main             SIM-based delity card, employing Near Field
producers of telecommunications equipment and                 Communication (NFC) proximity technology,
systems, and with research centres of excellence at           which enables the use of the phone owner’s
the most highly quali ed national and international           SIM as a Fidelity Card (see § Customers/Inno-
academic institutions. In 2009, three new collabora-          vative Services);
tive projects were begun with the same number of              the development, in collaboration with Nokia
                      Siemens Networks, of the rst “intelligent” an-           care to the city’s most disadvantaged people
                      tennas, capable of improving the performance             (see § Customers/Digital Divide).
                      of High Speed Packet Access (HSPA) technol-
                      ogy. This equipment makes it possible to opti-      The research and development activities carried out
                      mise the mobile radio base stations, improving      by the Operational and Business Units of Telecom
                      the quality of the service offered to customers     Italia, carried out internally or outsourced, have been
                      and, at the same time, guaranteeing lower en-       directed towards the creation of:
                      ergy consumption and a reduction of electro-             software products dedicated to the man-
                      magnetic elds;                                           agement of new commercial offers and new
                      experiments in the eld of LTE (Long Term                 services for customers (Business Support
                      Evolution) technology, natural evolution in ac-          Systems), to the proper functioning of network
                      cordance with the 3GPP standard of the HSPA              support systems (Operational Support Sys-
                      technology currently in use. The test, the rst           tems), and to Security;
                      in Italy and one of the rst in the world with            testing and speci c checks for tenders and
                      pre-commercial network equipment, was origi-             new network architecture;
                      nally carried out in the laboratory (at the TILab        new hardware infrastructure in support of the
                      test plant in Turin) and subsequently in an              applications.
                      area in the centre of Turin;
                      the release into operation of the converging        The main activities have been:
                      contact centre platform for business custom-             the development of a new platform, “CRM Busi-
                      ers (IPCC);                                              ness”, for the commercial management of the
                      the completion of the adjustments of the mo-             SOHO, SME, Enterprise and Top customers;
      92              bile network to enable the retracing of attempt-         the development of a new platform, “single,
   EXTERNAL           ed calls (Frattini decree);                              convergent billing” for the administration of
STAKEHOLDERS          the release into operation of the advertising            the invoicing of xed/mobile services for the

 the community        platform on the WAP and MMS services.                    consumer customer;
                                                                               the evolution of the digital platforms in sup-
                 In addition, in 2009, TILab made a decisive contribu-         port of the business departments for the im-
                 tion to the success of two Group initiatives of great         plementation of new services for the Consum-
                 social importance:                                            er, Business & Top customers;
                      the activation, at four paediatric hospitals in          the evolution of the hardware infrastructure in
                      Italy, of Smart Inclusion, a remote teaching so-         accordance with the principles of virtualisation
                      lution aimed at child patients (see § Respons-           (Next Generation Data Centre) and the provi-
                      es to the stakeholders);                                 sion of the technologies in order to develop
                      the activation in Rio de Janeiro of the rst pilot        the commercial offers in the ICT market (for
                      project of Telemedicine, bringing remote health          example, Ospit@Virtuale).
       People create the success of the business.

                  HUMAN RESOURCES

      96                                                                   2009, was divided as follows:
STAKEHOLDERS      The companies of the Group recognise the central          (UNITS)               DEC. 31     DEC. 31        CHANGES
                                                                                                    2009        2008
human resources   importance of Human Resources, in the conviction
                                                                            Italy                  60,829     63,521          (2,692)
                  that the principal factor in the success of any busi-
                                                                            Abroad                 10,499     11,017            (518)
                  ness is the professional contribution of the people
                                                                            Total personnel        71,328     74,538          (3,210)
                  who work there, within a framework of loyalty and         on payroll
                  reciprocal trust.                                         Leased                     56        782            (726)
                     The companies of the Group protect health and          personnel

                  safety in the workplace, and believe respect for          Total personnel        71,384     75,320          (3,936)

                  workers’ rights in the conduct of economic activity is    Non-current             2,205       2,505           (300)
                                                                            assets held for
                  a fundamental principle.                                  sale
                     The management of the workforce is aimed to            Total                  73,589     77,825          (4,236)
                  guarantee equal opportunities and to promote the
                  professional growth of each person.
                                                                           Excluding personnel concerned with “Discontin-
                                                                           ued operations/Non-current assets held for sale”
                                                                           (HanseNet) and leased personnel, the Group’s work-
                                                                           force has been reduced by 3,210 units, compared
                  The relevant stakeholders are the employees and          to December 31st, 2008.
                  trades unions.
                                                                           The changes can be itemized as follows:
                                                                                    the departure of the company TM News (105
                                                                                    units) from the area of consolidation;
                                                                                    the entry into the area of consolidation of
                  Telecom Italia Group                                              the company INTELIG Telcomunicaçoes (580
                  The headcount of personnel at December 31st,                      units);
      net turnover down by 3,685 units, as speci ed      Tim Brasil Group
      for individual Business Units:                     The headcount of personnel of Tim Brasil Group as
                                                         of December 31st, 2009, was equal to 9,783 units.

 (UNITS)         RECRUITED        DEPARTED       NET
                                                          (UNITS)            DEC. 31    DEC. 31       CHANGES
 Domestic               630          3,082     (2,452)                         2009       2008

 Brazil              2,024           3,109     (1,085)    Total Tim            9,783     10,285          (502)
                                                          Brasil Group
 Olivetti,              255            403       (148)
 and Other
                                                         Compared to December 31st, 2008, an overall re-
 Turn over           2,909           6,594     (3,685)
                                                         duction of 502 units was recorded, due to:
                                                              a balance of 3 units coming from other Group
Telecom Italia S.p.A.                                         Companies;
                                                              the entry into the area of consolidation of the
 (UNITS)             DEC. 31       DEC. 31       NET          company INTELIG Telecomunicações (580
                       2009          2008     CHANGE
 Personnel on        54,236         56,650     (2,414)
 payroll                                                      net turnover down by 1,085 units, as speci-
 Leased                       -        635       (635)          ed:

 Total               54,236         57,285     (3,049)
                                                          (UNITS)         RECRUITED    DEPARTED          NET
                                                          Turnover            2,024        3,109       (1,085)
                                                          Tim Brasil
                                                          Group                                                     INTERNAL
At December 31st, 2009, Telecom Italia S.p.A.’s on-                                                              STAKEHOLDERS
payroll personnel numbered 54,236 units.                                                                         human resources
                                                         Excluding leased personnel and personnel involved
Compared to December 31st, 2008, an overall re-          in “Non-current assets held for sale,” the number of
duction of 2,414 units was recorded, due to:             personnel operating in Italy is equal to 85% of the
      a balance of 61 units coming from other Group      Group total and can be broken down as follows:
      net turnover down by 2,475 units, as speci-
          ed:                                            TELECOM ITALIA GROUP – ITALY:
                                                         EMPLOYEE BREAKDOWN
                                                         BY PROFESSIONAL CATEGORY

 Turnover               384          2,859     (2,475)
                                                                         workers   managers middle
                                                                         0.4% 1.7%
 Italia S.p.A.                                                                              professionals

                                                                                             of ce staff/
                  TELECOM ITALIA GROUP – ITALY:                              TELECOM ITALIA GROUP – ITALY:
                  EMPLOYEE BREAKDOWN                                         EMPLOYEE BREAKDOWN
                  BY AGE GROUP                                               BY LEVEL OF EDUCATION

                                                          up to 32
                                                          years                                                          university
                                                          9.5%                          12.1%

                       over 45
                                                             from 33 to
                       41.5%                                 45 years                                                  high school
                                                             49.0%                                                     70.0%


human resources   The distribution of personnel by geographic area,          ing leased personnel and personnel concerned in
                  and the recruitment carried out by the Group, exclud-      “Non-current assets held for sale,” are shown below:

                  TELECOM ITALIA GROUP:                                      TELECOM ITALIA GROUP:
                  EMPLOYEE BREAKDOWN                                         RECRUITMENT BREAKDOWN
                  BY GEOGRAPHIC AREA                                         BY GEOGRAPHIC AREA

                                                            Abroad                                                    Italy
                                                            14.7%                                                     26.8%

                                                                Italy                                                    Abroad
                                                                85.3%                                                    73.2%
                        distribuzione del numero dei dipendenti del gruppo       distribuzioni delle assunzioni del gruppo telecom
                        telecom italia per aree geografiche                      italia per aree geografiche
The number of personnel operating in Tim Brasil
Group is equal to 14% of the Group total and can be
broken down as follows:                               In 2009, the percentage of women holding senior
                                                      management positions in the Group (in Italy) was
TIM BRASIL GROUP:                                     approximately 15% and, in middle management, the
BY PROFESSIONAL CATEGORY                              proportion was 26%.

                 senior                                  In 2009, the percentage of women holding sen-
                 managers            middle
                                     managers/        ior management positions in Tim Brasil was approxi-
                 0.3%                professionals    mately 19% and, in middle management, the propor-
                                     3.1%             tion of the total was 27%.
                                                         In Tim Brasil, women employed by the company
                                                      rose from 3,263 in 2003 (54% of the total) to 6,220
                                                      in 2008 (60% of the total), and stood at 5,726 in
                                                      2009 (58% of the total).

                                                      DISTRIBUTION OF MEN AND WOMEN
                                                      TELECOM ITALIA S.P.A. (2008-2009)
                                                                   2008                    2009
                                      of ce staff/
                                      specialists               27.2%                   27.8%
                                      96.6%                       women                   women

BY AGE GROUP                                                    72.8%                   72.2%
                                                                    men                     men
                over 45                                                                                           99
                years             up to 32
                                  years                                                                        INTERNAL
   from 33 to   4.8%              67.9%                                                                     STAKEHOLDERS
   45 years
   27.3%                                                                                                    human resources

                                                      DISTRIBUTION OF MEN AND WOMEN
                                                      TELECOM ITALIA GROUP (IN ITALY)
                                                                    2008                    2009

                                                                29.7%                   30.3%
                                                                   women                   women

                                                                70.3%                   69.7%
                                                                    men                     men


                 other            university
                 0.9%             35.3%
                                                      DISTRIBUTION OF MEN AND WOMEN
                                                      TIM BRASIL GROUP
                                                                    2008                    2009

                                                                60.5%                   58.5%
                                                                   women                   women

                                                                39.5%                   41.5%
                                                                    men                     men

                                  high school
                                                                             two agreements have been reached with the
                                                                             same number of outside nurseries (Rome and
                  Telecom Italia Group, over the years, has developed        Naples).
                  a series of “works in progress” and interventions          Loans for mums and dads: 259 loans have
                  in support of its Italian and Brazilian employees, to      been granted to new parents of children up to
                  improve the quality of their working lives and also        three years old.
                  support those outside the company.                         Christmas day: visits to parents’ of ces for
                                                                             children up to 10 years, around the Christmas
                                                                             period, and tea parties in 120 of ces, with the
                                                                             distribution of little gifts.
                                                                             Parents’ Days Off: booklets of time vouch-
                                                                             ers for 150 hours’ off annually, to be repaid
                  People Caring is the structure created by Telecom          through overtime, for employees up to level 5
                  Italia to respond to the expectations of the person-       of the collective agreement with children up to
                  nel on certain important issues, identi ed through         8 years of age.
                  active listening carried out both on line (Intranet,       Time off to attend pre-natal classes: time off,
                  community, email) and through meetings and focus           up to a maximum of 12 hours a month, to be
                  groups.                                                    recuperated, for working mothers- and fathers-
                     The issues identi ed are as follows:                    to-be.
                        work-life balance;                                   Intervention to ease the reentry in the compa-
                        support for the needs of children and families       ny of employees following maternity leave: the
                        in general;                                          development of management policies such as,
     100                support for initiatives of voluntary service by      for example, the option to work part time for a
   INTERNAL             employees;                                           year, renewable, for mothers of children up to
STAKEHOLDERS            encouraging the forms of diversity present in        8 years of age.

human resources         the work context through diversity manage-           Time saving: Agency Services: within 31 com-
                        ment activities and projects.                        pany premises (Turin, Milan, Venice, Padua,
                                                                             Bologna, Florence, Rome, Naples, Bari and
                  The work-life balance of employees                         Palermo), another three counters have been
                        Reconciling work and family life is not an easy      opened for dealing with various practicalities
                        task: however, the company can make an effec-        (administration, post etc.).
                        tive contribution. Telecom Italia was awarded        Wellbeing Areas; in the company of ces in
                        the “Family-Work 2009 Prize”, devised and pro-       Milan, Padua, Rome and Palermo, there are
                        moted by the Lombardy Region in collaboration        areas where it is possible to follow courses in
                        with ALTIS (Alta Scuola Impresa e Società, Cath-     physical wellbeing.
                        olic University) for creating the best integrated    Laundry/shoe repairs: this service is opera-
                        system for reconciling the family-work balance       tional in 4 premises (Milan and Rome).
                        in support of its employees and their families.      Newspaper kiosks: open in two of ces in
                        The initiative, now in its second edition, rewards   Rome.
                        businesses and public administrations whose          Special deals: on line offers of products and
                        planning and implementation of projects recon-       services arising out of Telecom Italia’s part-
                        ciling family and work life are outstanding.         nership agreements, mostly within Italy (cars
                        Pink Parking: for pregnant employees, through-       and motorbikes, entertainment and shows,
                        out the working period until the beginning of        electronic goods, sports goods, offers from -
                        maternity leave, a car par space is reserved in      nancial institutions, health and wellbeing, trips
                        all the of ces with company parking lots.            and holidays, miscellaneous).
                        Nurseries: in addition to the nine company           Company loans: 555 loans have been granted,
                        nurseries at the of ces in Rome (3), Turin, Mi-      of which 67 were for buying/building homes
                        lan, Ancona, Naples, Catanzaro and Palermo,          and 86 to nance renovation works on homes.
Balance between working life and free time for the             can be given visibility in order to increase the
children of employees                                          possibility of networking. Currently, 109 asso-
     Traditional summer camp: a 15-day stay for                ciations and non-pro t organisations partici-
     children aged between 6 and 12 years old.                 pate in the Community. In 2009, ve charity
     4,559 participants.                                       initiatives were organised in the cities of Rome
     Themed summer camp: a 14-day stay for chil-               and Naples, while “Solidarity Banquets” were
     dren between 11 and 17 years old, dedicated               arranged during the Christmas festivities (from
     to the study of English or Spanish, and sport-            Monday, December 14th, to Friday, December
     ing activities (football, tennis, sailing, horse-         18th) in Telecom of ces in Turin, Milan, Rome,
     riding, volley ball, basket ball, canoeing etc.).         Naples and Palermo, involving 17 associa-
     1,651 participants.                                       tions.
     Study visit to England: a 14-day stay at col-
     leges in three locations. 228 participants be-      Diversity Management activities and projects
     tween 14 and 17 years old.                                To give value to all forms of diversity in the
     Foreign study bursaries: 80 four-week visits              workplace (disability, single parents, ethnic
     abroad, dedicated to the study of the English             and religious diversity), several focus groups
     language, for young people between 15-17                  were organised in 2009 on the issues of dis-
     years old (41 in Ireland, 31 in Finland and 8             ability and diversity in gender, culture and age.
     in Spain); 20 study trips for an academic year            All members of management in the Human
     for young people between 15-17 years old (Eu-             Resources and Organisation Department were
     rope, United States and Canada).                          involved in a speci c training/information ini-
     Reimbursement of fees for the rst year of                 tiative, which was then broadened to other per-
     University for children of employees of Group             sonnel, through activities run on the Intranet,          101

     companies who achieved a score of 90/100 in               such as, for example, the “Diversity Contest,”         INTERNAL
     their school-leaving diploma.                             which consists of the publication of articles       STAKEHOLDERS
                                                               on speci c aspects of diversity, accompanied        human resources
Support for voluntary service initiatives                      by tests to make the reading more stimulating
     In December, 2009, a number of employees of               and increase involvement.
     the Group chose to spend a week at the Dyna-              The “Comunico-io” project was launched with
     mo Camp, of which Telecom Italia is a founder             the objective of identifying and implementing
     member, thanks to repayable time off from the             instruments which facilitate communication
     company. It is the rst camp that was purpose-             between around 80 colleagues who are af-
     built to host, at no charge, children suffer-             fected by deafness and those with whom they
     ing from serious and chronic diseases during              are in contact at work. The hearing-impaired
     treatment and in the post-hospitalisation pe-             employees are supplied with devices which aid
     riod. At the camp, children give great support            communication with others through chat serv-
     to each other and build up their self con -               ices and LIS – the Italian Sign Language.
     dence, which sustains them during the course
     of the treatment and on their return home.          ALATEL and the Gold Pins
     The volunteers had the task of welcoming the        The Association of Senior Workers of the Group
     guests (children, young people or families), ac-    (22,873 members, of which 3,555 are current em-
     companying and supporting them in their every       ployees) has continued to carry out its institutional
     need and necessity, ensuring the camp was an        activities, con rming its collaboration with Olivetti’s
     entertaining and stimulating environment, but       Gold Pins Association (3,417 members).
     also a safe and physically protected one.
     The “noi.perloro” Community, launched on            ASSILT
     the Intranet in 2007, brings together solidar-      ASSILT conducts campaigns in support of preventive
     ity initiatives carried out by employees of the     medicine and health education, in collaboration with
     Group, offering a place where these initiatives     public health-care centres and scienti c institutes.
                  Moreover, the Association distributes reimburse-
                  ments for integrated health services supplied by
                  the National Health Service (498,000 carried out in
                  2009, for a total of more than 50 million euros).         The work-life balance of employees
                     In 2009, the health education campaign on prop-        In 2009, Tim Brasil supported various initiatives,
                  er nutrition was completed, organised in collabora-       including:
                  tion with the National Institute for Food and Nutrition        “TIM opens the doors”: allows children to get to
                  Research, which was aimed at all members and, in               know their parents’ working environment during
                  particular, users of the company’s catering facilities.        Brazil’s Children’s Day; recreational activities
                     At December 31st, 2009, the Association had                 were staged for the occasion, open to all em-
                  185,656 members, of whom 61,220 were employ-                   ployees’ children aged between 3 and 12 years.
                  ees, 38,844 were pensioners and 85,592 were                    “Happy Day”: on their birthdays, employees
                  families.                                                      have the right to a day off and to receive a birth-
                                                                                 day card signed by all their work colleagues.
                  ASSIDA                                                         Gymnastics and ergonomics: in the company
                  ASSIDA distributes reimbursements for health serv-             of ces in Rio de Janeiro, Belo Horizonte, São
                  ices, supplementary to those supplied by the Na-               Paulo, Curitiba, Recife, Santo André, Brasil-
                  tional Health Service. In 2009, 60,000 cases were              ia, Salvador, Florianopolis, Porto Alegre and
                  handled for an overall amount of 20 million euros.             Belém, gymnastic sessions are held in the
                     At December 31st, 2009, the Association had                 workplace, in order to encourage correct pos-
                  5,080 members among managers, in-service or                    ture and the proper use of work tools. In the
                  pensioners, making a total, with their families, of            regional of ces in Rio de Janeiro, Belo Hori-
     102          11,800 bene ciaries.                                           zonte, São Paulo and Curitiba, it is possible
   INTERNAL                                                                      to follow courses in physical well-being and
STAKEHOLDERS      CRALT                                                          relaxation, such as Shiatsu and Yoga, either in

human resources   CRALT organises initiatives for its members, employ-           a gym or a dedicated area.
                  ees and pensioners, such as:                                   Special Deals: national and/or regional agree-
                       tourism (group and individual trips) with an              ments for the purchase/use of goods and
                       average saving of 15%, compared to market                 services under advantageous conditions, for
                       prices;                                                   car and motorbike insurance, cultural and en-
                       sports (participation at national and regional            tertainment services, restaurants, health and
                       meetings of the main sports);                             well-being and the practice of sport. In 2009,
                       cultural and recreational events (guided tours,           agreements were entered into with Universi-
                       painting courses, theatre and cinema eve-                 ties for language courses and other types of
                       nings);                                                   instruction.

                  The contribution in support of members can reach          Private health assistance in Brazil
                  40%. The fees to participate in the initiatives can be       The private Health Assistance programme for
                  paid by instalments, through deductions from salary.      employees of the companies of the Group in Brazil
                     Moreover, CRALT allows members and their re-           includes both medical and dental services through an
                  spective nuclear families, through the stipulation        accredited network, and a system of reimbursements
                  of appropriate agreements, to acquire goods and           – with prede ned maximums – for services outside
                  services of particular importance and usefulness          the network. The overall cost of health services dur-
                  (such as, for example, school books, season tickers       ing 2009 was more than 12 million euros. As in
                  for public transport) at especially favourable prices/    2008, a programme of voluntary vaccination, aimed
                  fees, taking advantage of payment by instalments.         at preventing in uenza, was also carried out in 2009.
                     At December 31st, 2009, there were 50,380                 At December 31st, 2009, there were 18,074
                  members, of whom 44,034 were employees and                members, of whom 9,454 were employees and
                  6,346 were pensioners.                                    8,620 were relatives.
Supplementary social security in Brazil                  out in the rst months of 2010.
Since 2006, Tim Brasil has operated the Private                The new developments are designed to:
Social Security Plan for all employees. At the end of             simplify the process, making an overall as-
December, 2009, the membership ratio reached 85%                  sessment of the contribution of each collabo-
of employees, in con rmation of its appreciation.                 rator in reaching the objectives of the sector to
                                                                  which they belong;
                                                                  disseminating a single model of conduct
                                                                  (“house style”) through the identi cation of
                                                                  a set of behaviours, guided by the Customer
The department for human resources development                    Promise, which are regarded as fundamental
has the objective of demonstrating the technical and              in achieving the company’s objectives and the
managerial competence of the resources, drawing up                continual improvement of the satisfaction of
plans for their development and loyalty, with particu-            the end customer.
lar regard for talent. The instruments used for this
purpose, drawn up with regard also to the national       The Performance Assessment in Tim Brasil involved
and international benchmarks, are described below.       96.5% of the collaborators(1). This year, competence
                                                         in “focus on the customer” was included as an ob-
Assessment of performance                                ligatory assessment for all collaborators. The feed-
In the course of the year, a process of reappraisal      back was also regarded as an obligatory stage in
has been underway of the Performance Assessment          concluding the assessment process. The individual
System, with the introduction, underway since 2008       development plan, which follows the assessment
in the assessment phase, of certain signi cant de-       process, has, for the rst time, been made available
velopments.                                              on line.                                                                     103

Interventions have been provided aimed at:               Assessment of Potential and Succession Schemes                          STAKEHOLDERS
     increasing the selectivity of the instrument and    In 2009, a new assessment of readiness for man-                         human resources
     making it more consistent with meritocratic         agement was designed in Telecom Italia, through
     choices, through the introduction of guidelines     which around 200 managers were assessed.
     for the distribution of the assessments;                  The Assessment Programme is aimed at broad-
     improving the uniformity of the assessment cri-     ening awareness of the capacity and potential of
     teria, through the establishment of Calibration     the resources, in order to give direction to the deci-
     Committees;                                         sions on the issue of succession management and
     underlining the centrality of the feedback inter-   to guide training. The information collected, together
     views between bosses and collaborators in lay-      with that concerning professional experience, is
     ing the foundations for a process of improve-       used to de ne the Succession Schemes organised,
     ment in performance and the development of          from this year, in a new digital system.
     professionalism, through the introduction of              In Tim Brasil, the assessment programme has in-
     a new on line facility through which those as-      volved 70 managers in positions of responsibility.
     sessed can give notice of any cases of feed-
     back interviews not received.                       “The professions of the future” project
                                                         In 2009, a project was carried out, using the meth-
The 2008 performance assessment process, which           odology of the Delphi provision, to identify the “Pro-
was completed in the rst months of 2009, involved        fessions of the Future” in the technological and
around 99.3% of those eligible, that is more than        commercial sectors, through the involvement of a
53,000 people (nearly 17% more than the number           panel of 40 internal professionals, to assess the
assessed in the previous year). Following the results
achieved and the experience gained, further new
                                                         (1)   The process concerns employees who have worked for a minimum
developments were introduced in the performance                of six months in the year in question, apart from managers and
                                                               those who work in customer care centres (for which an appropri-
assessment process in 2009, which will be carried              ate assessment is made).
                  implications that the development of the ICT market      network to another 11 technical institutions, making
                  may have on the professional system.                     a total of 22 schools across the entire country (7
                     The methodology used allowed the development          in the north and 15 in the centre-south), more than
                  within the company of a methodological approach          600 students and 22 “Masters of the profession.”
                  to the solution of complex problems, reinforcing the
                  commitment and motivation of the resources in-           Another initiative of particular importance is the
                  volved in evaluations and strategic choices.             “Campus” project. Carried out in collaboration with
                                                                           Elis, it features a structured course in employer
                  Development project for the Marketing department         branding, recruiting and training over three years,
                  Starting from the analysis of the competence gap,        aimed at the best students of the Masters’ course
                  an action plan has been de ned to launch a process       in Economy, Engineering Management and Busi-
                  of knowledge transfer, aimed at the resources in the     ness Communication. Currently, eight young people
                  Marketing structures. The plan has allowed the im-       from various Italian universities have been included
                  plementation of a series of actions of development       in the project. In September, the rst phase was
                  and training, both individually and as a group.          completed, which saw the young people in close
                     The project involved a total of 11 senior manag-      contact with colleagues from the Domestic Market
                  ers, 55 middle managers and 116 employees.               Operations Management in the two project streams
                                                                           of IPTV and MTV Mobile. The second phase of the
                                                                           project, which will be run in 2010, is about to begin
                                                                           and will see the young people involved in a period of
                                                                           on-the-job training in various parts of the company.
                  In 2009, an external selection policy was imple-
     104          mented, applicable at the Group level, which en-         Among the new initiatives of an international nature,
   INTERNAL       sures uniformity in the processes of the selection       there is the “Future Skills” project, with the on-the-
STAKEHOLDERS      of the resources coming into the company, in line        job training, during 2009, of 8 young researchers

human resources   with the measures of the Group’s Code of Ethics.         from Brazil, Japan, Korea and India. The projects de-
                  The policy is founded on the recognition of the value    veloped during the period of internship, at the Future
                  of the diversity of each individual, irrespective of     Centre of ce in Venice, concerned the analysis of
                  gender, religion, ethnicity, opinion and ability, and    the emerging business ecosystems in order to iden-
                  ensures equal opportunities for people who take          tify future opportunities.
                  part in the selection processes that lead to hiring by
                  Telecom Italia.                                          Among the established training courses, there
                                                                           are collaborations with the Polytechnic of Turin for
                  The year 2009 was packed with new projects aimed         the creation of the Master’s in Innovation and the
                  at creating training courses for the young. In par-      continuance of the partnerships begun in previous
                  ticular, among the new initiatives undertaken, the       years through the distribution of study bursaries and
                  “School-Business Network” project stands out.            on-the-job training.
                  Planned together with the Elis Centre and aimed at
                  students in the fourth and fth classes of the Higher     In 2009, Tim Brasil carried forward the following se-
                  Technical Institutions, the project provides an educa-   lection programmes:
                  tional course on Tlc subjects, co-designed with the            “Nosso Aprendiz”: promotes the training of
                  lecturers of the technical institutions and colleges           young people aged between 16 and 24 for
                  directly involved in the subject, the so-called “mas-          work in the call centres or in customer recep-
                  ters of the profession.” In the second semester of             tion in company outlets. A course of adminis-
                  2009, the rst edition was successfully completed,              trative training has been launched for juveniles
                  involving 323 students, 11 institutions and 9 colleg-          to prepare them to enter the world of work.
                  es of the territorial Open Access structures. In par-          The programme, begun in 2008, enrolled 158
                  allel, the second edition was launched, redoubling             participants in 2009.
                  the training challenge with the broadening of the              “Talentos sem fronteiras”: launched in 2009,
      with the objective of researching the market of     In the six months from January to June, two Semi-
      new graduates, in order to create a pipeline of     nars were conducted on the issue of Environmental
      talent to be trained and developed to build the     Emergencies, which involved around 40 resources
      company management of the future.                   in a total of around 1,500 hours of training, and an
      “Estagio Sem Fronteiras”: on-the-job training       edition of the Seminar, “Green Economy – Sustain-
      offers young university students an opportunity     ability and Green Procurements” – aimed at around
      for development and preparation for the jobs        80 resources from middle and senior managers of
      market, thanks to the training and real profes-     various structures, for around a further 700 hours
      sional experience aimed at increasing the pro-      (see § The Environment).
      fessionalism of the young trainees. In addition,
      all the trainees were invited to take part in the   Following on from 2008, training sessions were car-
      “Concurso sem Fronteiras” programme, whose          ried out on effective conduct, and on ICT scenarios
      objective is to propose a project that could        for senior managers, middle managers and levels
      contribute to the improvement of Tim Brasil. In     6 and 7 of the collective agreement, which were de-
      2009, furthermore, a new programme was set          signed to reinforce the spread of a uniform manage-
      up aimed at the selection of talented trainees      rial culture.
      with the objective of increasing their chances of
      being hired by the company and their possible       The 2009 training plan on the Sarbanes Oxley Act
      entry to the project “Talentos sem fronteiras.”     – 404 (SOA) was launched, with lecture sessions,
                                                          aimed at updating awareness of the obligations aris-
Also in 2009, the hiring of personnel who had al-         ing from the legislation, and an in-depth examination
ready worked within the company was favoured,             was carried out of the issue of “Segregation of Du-
through the adoption of processes, criteria and           ties” through an e-learning package. On the Organi-             105

instruments aimed at ensuring equal opportunities         sational Model 231, in addition to the traditional            INTERNAL
and transparency.                                         classroom sessions, an e-learning course was pro-          STAKEHOLDERS
                                                          vided to spread awareness and ensure its effective         human resources
                                                          application. A special edition of noi. ash was dedi-
                                                          cated to the subject and distributed to colleagues in
                                                          all the Group’s companies.
In the Telecom Italia Group, training activities un-
dertaken in the period January-December, 2009,            To contribute to the diffusion and communication
amounted, for personnel in Italy, to around 1.8 mil-      of the new Quality vision, founded on the Customer
lion hours, as the following table shows, involving       Promise and on the improvement of the Customer
around 19.8 million euros in direct costs, excluding      Satisfaction Index, the “Expressing Quality” Project
the labour cost and travel expenses.                      was carried out (see § Customers / Focus on
   In all, 80.1% of the Group’s personnel have par-       customers). Aimed at all the management (1,400
ticipated in at least one training session.               people) and around 3,000 resources in the territory
                                                          (“governance groups” and “touch points coordina-
Cross-Group projects                                      tors”), it was carried out through an interactive train-
The 2009 training plan had three priorities:              ing method, and supported with speci c actions of
      the promotion, development and diffusion of         internal communication. Still of the issue of Quality,
      expertise in line with the objectives of the In-    a “Quality” learning tour was conducted with the
      dustrial Plan and organisational needs;             participation of 24 senior managers, who visited
      the development of a management culture in          companies of excellence in Europe and drew up con-
      line with the evolution of the business and the     crete proposals for improvement.
      respective framework scenarios;
      the dissemination of knowledge in the socio-        In order to make the company processes ever more
      economic context and awareness of corporate         ef cient, in line with the actions laid down by the In-
      responsibility.                                     dustrial Plan, a training plan has been carried out to
                    ORGANISATIONAL                                                              TOTAL BY TRAINING TYPE

                    Type of Training                     hours           hours               Costs          Costs   Participa-    Participants    Coverage
                                                         totals       per head               totals      per head       tion(*)           (no.)        (%)
                                                          (no.)           (no.)             (euros)       (euros)        (no.)

                    Specialist training            1,650,721               27.7       12,242,604             206     270,720           42,909        72.1

                    Senior Managers                      4,162               4.1          229,962            225          404             262        25.7

                    Middle Managers                    30,753                7.1        1,800,681            413         3,229          1,800        41.3

                    Of ce Staff/                   1,615,805               29.8       10,211,961             189     267,087           40,847        75.4

                    training                           94,430                1.6        6,893,905            116         6,593          4,930          8.3

                    Senior Managers                    10,741              10.5         1,725,185          1,691          850             405        39.7

                    Middle Managers                    17,390                4.0        1,694,627            389         1,295            857        19.7

                    Of ce Staff/                       66,299                1.2        3,474,094             64         4,448          3,668          6.8

                    training                           13,832                0.2          116,606              2         4,633          4,370          7.3

                    Senior Managers                        723               0.7                2,178          2          152             132         12.9

                    Middle Managers                      3,501               0.8            99,690            23          589             513         11.8

                    Of ce Staff/                         9,608               0.2            14,738             0         3,892          3,725          6.9

                    Training for newly-
     106            hired employees                    49,176                0.8            97,210             2         1,650            682          1.1

   INTERNAL         Senior Managers                           0              0.0                    0          0              0              0         0.0
STAKEHOLDERS        Middle Managers                        144               0.0                    0          0              7              7         0.2

human resources     Of ce Staff/                       49,032                0.9            97,210             2         1,643            675          1.2

                    Language training                  18,132                0.3          539,138              9          703             650          1.1

                    Senior Managers                      3,858               3.8          170,991            168          104               90         8.8

                    Middle Managers                      4,336               1.0          112,531             26          193             156          3.6

                    Of ce Staff/Work-                    9,938               0.2          255,616              5          406             404          0.7

                    TOTAL                          1,826,290               30.7       19,889,464             334     284,299           47,669         80.1

                        Senior Managers                19,484              19.1         2,128,316          2,087         1,510            603         59.1

                        Middle Managers                56,124              12.9         3,707,529            851         5,313          2,425         55.7

                        Of ce Staff/               1,750,682               32.3       14,053,618             259     277,476           44,641         82.4

                  (*)    Shows the overall number of participation in training sessions, in
                         the various forms provided (classroom, training on the job, on line)
increase the awareness and implementation of the          In Tim Brasil, in June, 2009, the coverage of train-
Lean Six Sigma (LSS) and Knowledge Management             ing reached 98%, and the average number of hours’
methodologies, which involved management and              training for employees was 46 hours per head, in-
some of the professionals in the Human Resources          cluding e-learning, for which Tim Brasil created its
area. In addition, courses in LSS certi cation have       own learning portal, “@aula.TIM.” The training provi-
been set up, aimed both at Human Resources and            sions favoured the safeguarding of technological
the operational departments.                              competence and building up the competence that
                                                          is characteristic of the Customer Care and Sales
Training to ensure business and technological ef-         pro les, with particular attention to the launch of the
fectiveness                                               new portfolio of products. The Programma di Gestão
Specialist training has continued to be directed at       del Alto Desempenho is of particular importance,
speci c departmental competence, with particular          designed to assist 300 Customer Care managers in
attention to the most innovative aspects: equipment,      contributing to the improvement of productivity and
 xed and mobile network broadband services, digital       ef ciency of operations and ensuring greater satis-
systems, technological plants, supply plants, net-        faction among customers.
works and new generation software, lean organisa-
tion. In addition, broad-based programmes have been       Other initiatives carried out by Tim Brasil concerned
created, which will run in 2020, of information, aware-   three types of training:
ness and training on the issue of the Commitments               international: carried out at the Harvard Busi-
and Code of Conduct arising from the resolution                 ness School and aimed at a restricted group
718/08/CONS, in compliance with the obligations                 of managers with the aim of developing an in-
assumed with regard to AGCOM (see § Competitors /               tegrated approach to management, broadening
Commitments connected with the access network).                 and consolidating the strategic vision;                  107

                                                                specialist: participation in seminars and con-         INTERNAL
Regarding the methodology employed, in addition to              ferences in order to develop the technical com-     STAKEHOLDERS
classroom and on-the-job training, the recently intro-          petence of employees, with the focus on new         human resources
duced e-learning platform was used extensively.                 projects in the area of Network and Informa-
                                                                tion Technology and on business competence
Training interventions have continued for staff in the          in the staff areas;
Sales and Customer Operations structures, aimed                 languages: the development of the linguistic
at boosting technical knowledge and the manage-                 competence of the staff who have direct con-
ment capacity in customer relations. Especially rel-            tact with foreign countries or who occupy roles
evant was the “Value, together with the customer”               that require knowledge of a foreign language.
project, a mapping of the knowledge and funda-
mental competence of the sales force, carried out         In November, 2009, a programme of subsidies
through dedicated instruments.                            and incentives for on line university training was
                                                          launched for a group of 100 employees, with par-
For the Marketing Department (sales, marketing,           ticular focus on Customer Care and Sales.
strategy and customer care), the rst edition was
held of the Master’s course, MAKTEL (Marketing Ac-
tionable Knowledge Through Experiential Learning),
the project aimed at junior specialists and designed
to make Telecom Italia a centre of excellence in mar-     The instruments available to employees within the
keting expertise.                                         company to have their voice heard, both in a formal
                                                          and informal way, are numerous.
In addition, speci cally for the Marketing depart-           In Telecom Italia and Tim Brasil, employees can
ments, ve themed training courses were held for           make a series of approaches of an informal nature
the development and consolidation of specialised,         to various dedicated email addresses, obtaining
management expertise.                                     prompt responses on the services required and the
                  issues raised.                                             July, 20 “lighthousers” were involved in two focus
                     Nevertheless, in a complex organisation such as         groups on the company identity and, in the same
                  Telecom Italia, unilateral communication is no longer      month, two experiments were conducted. To encour-
                  suf cient to encourage involvement and give value          age listening, the experiments provided a dedicated
                  to ideas, including lateral or, more simply, “different”   blog, with the application of a questionnaire, and
                  thinking. For this reason, there is a gradual “conver-     three evaluation focus groups.
                  sion” of the traditional communication channels to            One focus group was conducted with a number
                  more innovative ways of favouring two-way communi-         of employees to test the new questionnaire in order
                  cation, the exchange of ideas, the dialogue between        to nd out about the atmosphere within the compa-
                  members of the company community. The aims are             ny, which will be sent to the whole Group in January,
                  several, but central to this is nding and giving value     2010. The questionnaire, which has been redrawn in
                  to the contribution of each employee in improving          its language and structure, is intended to stimulate
                  the present and building the future.                       re ection and participation by employees. New ques-
                     In this sense, the Intranet and the portal are          tions were introduced in order to nd out about and
                  ever more important components. Other instru-              value the internal interactions of the company, the
                  ments exist capable of reaching everyone, in order         value of the relations and the exchange of knowl-
                  to disseminate information but also to arrange             edge within the professional communities.
                  broader occasions for formal and informal “listen-
                  ing”, such as climate analysis, the blogs and the          Reports to the manager responsible for the inter-
                  open virtual communities. In this way, discussion          nal control in Telecom Italia
                  and debate are encouraged on internal issues linked           In line with the principles contained in the Code
                  to the business and more general current topics, in-       of Ethics, the “Whistleblowing procedure” has been
     108          cluding environmental and social issues.                   issued for all the companies of the Group, pub-
   INTERNAL          In this framework, other recent experiences have        lished on the Intranet. This procedure, administered
STAKEHOLDERS      been included which, in different ways, see the par-       by the manager responsible for the internal control

human resources   ticipation of personnel as a determining factor and        in Telecom Italia, ensures the reception, analysis
                  which, for this reason, provide structured channels        and handling of reports on matters concerning the
                  for the collection of contributions and proposals.         internal control system, company information, fraud
                  Among these is the “Archimede” project, developed          and other matters (violations of the Code of Ethics,
                  by the Open Access structure to provide a climate for      mobbing practices, theft, security etc.). The reports,
                  reinforcing the team spirit, but also to collect good      forwarded in whatever way (paper, electronic, fax
                  ideas, which can contribute to resolving problems          etc.), may be made by employees (including the Top
                  and improving relations with the customer, giving          Management), collaborators, consultants, providers
                  those who put them forward recognition, a sense of         of work, as well as third parties with business rela-
                  belonging, an enthusiasm for feeling an active part        tions with the Group. Each report is subject to analy-
                  of the system. The project involved 20,000 Open            sis; the outcomes of the proceedings are conveyed
                  Access personnel and ended with the awarding of            to the top management of the company, to the statu-
                  prizes by interdepartmental juries for the 34 best         tory control bodies and to the company departments
                  ideas (out of 2,521 received). The project was also        concerned, with the complete guarantee of privacy
                  broadened in 2009 to the Wholesale Management.             for the person who made the report.
                     The third edition was conducted of “The Light-             As regards the regulations of reports to the
                  house,” the listening project launched in 2006,            Supervisory Body and the Board of Auditors, see §
                  which involves employees in putting forward ideas          Shareholders /Corporate Governance.
                  and opinions on matters of interest to the company,
                  and in experimenting with the Group’s new products
                  and services. The latest edition attracted 3,177
                  subscribers among colleagues through the on line
                  questionnaire. All the participants were successfully      In 2009, internal communication continued the
                  enabled in the use of the blog, “The Lighthouse.” In       process of greater encouragement and listening to
employees in order to bring the company and the              Model 231;
personnel closer together.                                   internal communication newsletter: this is
   The internal communication events of 2009 were            sent regularly via email to all employees and
conducted with the intention of involving the great-         summarises the most important news pub-
est possible number of employees and making them             lished on the company Intranet;
the driving force behind the choices connected to            noi.tv: 88 editions of the bi-weekly news pro-
the business and the growth of customer satisfac-            gramme, “Videonews” were produced, with 60
tion. A limited number of people took place live,            monographic type services and 186 videos,
while the majority watched the video streaming from          plus selections of articles from the press;
their workstations and took part in the discussion           DVD Network Nuggets and Innovation Nug-
with managers via blogs and the virtual networks.            gets: retakes of the specials shown on noi.tv
The on line method also allows the impact of the             for information purposes. They are produced
Group on the environment to be minimised in terms            to spread awareness of the technical and in-
of greenhouse gas emissions. In any event, the               novative aspects of Telecom Italia to staff
emissions of CO2 generated were compensated for              personnel;
all the events.                                              the Visual Q project: commercial artwork at
   The Group’s personnel have been the subject of            the territorial, central and management of-
photographs, videos and stories that have enriched            ces in order to develop communication on
and empowered the company’s media.                           the issues of Customer Satisfaction and Cus-
                                                             tomer Promise, and to emotionally involve the
Scenarios                                                    personnel and diffuse the culture of quality.
“Innovation, Quality, Commitment”: this was the title        The dissemination of the messages is initially
of the meeting organised for 1,400 managers of the           aimed at Open Access colleagues, putting the            109

Group. The objective of the meeting was to present           accent on operational and behavioural aspects         INTERNAL
the company in the 2009 scenario, the Industrial             in line with the training project, “Expressing     STAKEHOLDERS
Plan, the competitive system, the rules, objectives          Quality”;                                          human resources
and challenges for the management, a new style of            2010 diary: implemented with the contribution
leadership. At the centre of the work was the Busi-          of Telecom Italia’s historic archive and with
ness that we want to become, the relations we want           photographs produced by a number of pho-
to have in our ecosystem, the dialogue with all the          tographer colleagues, it traces a photographic
components of the country, simplicity in relations           journey through the story of the Telecom Italia
with the market and with the customers, the style            company from the twenties to the present day.
that it is necessary to adopt.
                                                        Integration activities and projects
Information and company media                                The Intranet community has recorded an in-
     Intranet: around 480 news items were pub-               crease in participation by employees of 5% in
     lished and the homepage was renewed, with               each section in which it operates. The aver-
     the reorganisation of the contents to facilitate        age monthly participation of the employees in
     its use and encourage navigation to the chan-           the community and blogs stands at 150,000
     nels on speci c issues. Special information             hits, with an average of 6,000 hits a day. The
     lea ets on the earthquake in Abruzzo were pro-          Community is intended to allow colleagues to
     duced with the participation of colleagues in           share their experiences, needs and opinions
     the areas affected, on behalf of whom a fund-           on various issues. In the various sections into
     raising campaign was conducted on the web;              which the community is broken down – com-
     noi. ash: four issues of the newsletter dedi-           pany events, buying and selling, photography,
     cated to sustainability were published, on              blogs, music, lms, exhibitions and plays, travel
     the analysis of the atmosphere ‘Group Photo             stories, PC help, books, cooking recipes, noi.
     2008’, the training project ‘Expressing Qual-           perloro – it is possible to nd ideas, advice,
     ity’ and on the training on the Organisational          solutions, taking part and making contributions
                        for the bene t of colleagues. The noi.perloro             TIM brand on the Brazilian market, also dis-
                        section contains an interactive area dedicated            seminated to employees through all the inter-
                        to voluntary work and solidarity projects (for            nal vehicles of communication;
                        further information, see § “People Caring”).              the celebration of World Environment Day
                        Various issue-based blogs have been set up for            (June 5), with the launch of a campaign to
                        sharing the suggestions and ideas of employ-              make employees aware of their role in relation
                        ees on social issues (dyslexia), experimenta-             to natural resources and the environment. In
                        tion (“TIM Net,” “The Lighthouse”), Quality (“Ex-         2009, the commitment continued to the differ-
                        pressing Quality”), research (“New generation             entiated collection of used batteries and the
                        Tlc network”, “Research and Trends”), interest            promotion of behaviour aimed at favouring the
                        in photography (“Emotional Zoom”). Regarding              use of recyclable materials and saving water
                        the latter, 13 colleagues were involved in the            and energy;
                        project on the new company magazine and the               the setting up, in certain company of ces, of
                        diary, becoming for all intents and purposes              a library room open to all staff for the loan of
                        suppliers of images for all the reportage.                books and DVDs, backed by a speci c, internal
                        Convention involving certain company depart-              communication campaign to encourage the do-
                        ments (Business Market, Purchasing, Admin-                nation of books and the use of the library;
                        istration, Finance and Control, Corporate and             the launch, in December, 2009, of an initia-
                        Legal Affairs, External Relations, National               tive to make employees aware of requests for
                        Wholesale Services), with the aim of promot-              Christmas presents sent by the children of low
                        ing team work and sharing results and objec-              income families.
                        tives. In certain cases, the multimedia conven-
     110                tion model has been successfully used with
   INTERNAL             the participation, via web streaming, of many
STAKEHOLDERS            colleagues following the event from their own

human resources         workstation, with the opportunity to intervene      In 2009, the Group launched or continued certain
                        in the discussion and ask questions.                speci c projects and initiatives:

                  In Tim Brasil, internal communication has mostly          Up-dating the company’s Risk Evaluation Document.
                  been carried out through the company Intranet, “TIM       The new Risk Evaluation Document has been drawn
                  Mobile” (notice board), email and certain speci c         up, updated with regard to the current organisation-
                  initiatives.                                              al structure, the activities carried out and the new
                      In particular, information has been supplied          measures introduced by the Decree Law of August
                  through the Intranet to employees about the busi-         3rd, 2009, No. 106, adapting Decree Lee 81/2008,
                  ness, TIM services and products, and on initiatives       on matters of the protection of health and safety in
                  promoted by the Human Resources Department. On            workplaces. The evaluation regards all the health
                  the Intranet, a speci c HR area is also provided so       and safety risks to workers, including those exposed
                  that all employees can access, among other things,        to speci c situations (work stress, females working
                  the electronic pay packet and associated bene ts.         during pregnancy), as well as those connected with
                      TIM Mobile is constantly used to disclose impor-      differences in gender, age and different country of
                  tant news and supply information on internal/exter-       origin.
                  nal campaigns.                                               The document was drawn up, as laid down by the
                      Emails are used, on the other hand, to commu-         decree, with the participation of the manager of the
                  nicate extraordinary events or speci c initiatives        Prevention and Protection Service and subject to con-
                  aimed at employees.                                       sultation with the workers’ safety representatives.
                                                                               To ensure the swift adaptation of the document
                  Among the main initiatives promoted in 2009 by Tim        to incorporate any technological and organisational
                  Brasil, were:                                             changes, the document is in electronic format and
                        “Mentes sem fronteiras”: repositioning of the       available on the Intranet. This permits all informa-
tion, documents, procedures and measures linked                 psychological and physical wellbeing;
to the issue of health and safety of workers to be              the appreciation of the personnel, through the
connected to the Risk Evaluation Document.                      recognition of expertise and work experience,
                                                                equality of treatment, and the transparency
Safety rules and procedures                                     of the organisational decisions, represent im-
Various procedures have been drawn up or updated,               portant points of attention to promote greater
including those regarding insects, the management               wellbeing at work.
of air-conditioning systems and health controls. The
latter, in particular, describe the tasks and responsi-   In order to verify the proper application of the agree-
bilities in the management of the health protection       ment between the company and the trades unions
of workers exposed to speci c risks, as well as the       on wellbeing in the call centres, signed in May,
health checks workers should be subjected to de-          2008, speci c Commissions are checking the im-
pending on the activity carried out. The process has      plementation of the initiatives useful in promoting
been reviewed and updated to include health checks        wellbeing, with regard to the following macro areas:
for risks connected to night work, to exposure to         the valuing, training and updating of the personnel,
electromagnetic elds and to work on transmission          the reconciliation of work and private lives, the work
systems with laser on bre optics.                         environment, organisation and rhythms of work.

“Wellbeing in the call centres” project                   Training and awareness of the workers
The project was begun in 2004 with the aim of un-         Consistent with the current legislation, speci c train-
derstanding the variables which help in uence in a        ing courses have been conducted on matters of
decisive way the wellbeing of the people who work         health and safety at work for the newly hired, those
there, and identify possible actions of improvement.      changing jobs and/or following the introduction of             111

In line with the initiatives implemented on the peo-      new activities, equipment or substances. A proc-             INTERNAL
ple-caring front, a second monitoring process was         ess of awareness promotion has been started on            STAKEHOLDERS
carried out which involved around 3,000 operators         the role of the responsible for the health and safety     human resources
(a representative sample of the call centre popula-       of workers, as well as training courses for all call
tion) through the compilation of an on line question-     centre operators on the risks from noise linked to
naire, reviewed and supplemented on the basis of          the use of headphones. Other initiatives in support
the outcome of the previous research phases.              of health and safety in workplaces were carried out
   From the analysis of the data collected, carried       through the distribution of speci c pamphlets and
out by the researchers of the Faculty and Depart-         via the Intranet.
ment of Psychology of the University of Turin, it
emerged that:                                             Safety in contract works
      the reconciliation of the work-life balance im-     As a result of the amendments introduced by De-
      pacts on psychological and physical disorders.      cree Law 106/09 the organisational procedures
      In this way, the operator can be supported in       for safety in contract works have been updated. In
      reaching and maintaining a better work-life         collaboration with the sectors concerned, speci c
      balance, both through an adequate and more          instructions are being issued with the aim of operat-
      functional organisation of the working hours        ing with respect for the regulations in the respective
      and shifts, and through organisational initia-      processes. In parallel, standard contractual clauses
      tives aimed at meeting the needs of the fam-        on matters of safety and the environment for con-
      ily;                                                tract works have been implemented and simpli ed,
      technological and digital supports, including       in accordance with recent regulatory measures.
      instruments to handle the emotional relation-
      ship with the customer, are resources that can      Accidents at Telecom Italia
      facilitate and sustain work;                        The data on accidents regarding Telecom Italia
      the quality of the physical environment of work,    S.p.A. are presented below, in comparison with data
      in line with the ergonomic measures, favours        referring to the preceding years.
                                                           2009       2008        2007
                                                                                             In 2009, Tim Brasil has carried out certain activities
                   Number of accidents                    1,079         932         969      to ensure and promote health and safety at work,
                   Severity index (*)                      0.42        0.45        0.24      including:
                   Frequency rate (*)                     11.28        9.77       10.28            updating the company document of Risk Evalu-
                   Average duration in hours            127.73      127.31      136.01             ation and drawing up speci c documents on
                   Rate of                                 1.44        1.24        1.40            issues of the environment, health and safety
                   unproductiveness (*)
                                                                                                   in work places;
                   Accidents per 100 workers               1.97        1.63        1.62
                                                                                                   the carrying out, in the eld of the supervision
                  (*)   The indices of severity, frequency and unproductiveness are                of health and medicine at work, of 7,300 medi-
                              the number of conventional working days lost in the year for         cal examinations;
                              every thousand hours worked;
                              the number of accidents per every million hours worked;              the carrying out of controls and monitoring on
                              the number of hours lost due to accidents for every thou-
                              sand hours worked.                                                   buildings, plants, equipment and processes,
                                                                                                   including 119 micro-climatic and noise meas-
                                                                                                   ures in the call centres and company shops;
                                                                                                   the carrying out of 8 evacuation rehearsals to
                  Alongside the many training projects intended for                                check the ef ciency of the Emergency Manage-
                  the technical personnel, there has been a reduc-                                 ment Plans.
                  tion of more than 1% in workplace accidents, that is,
                  those closely related to occupational hazards.
                        In particular, we draw your attention to:
                           the annual program of training and instruction
                           for the routine and general maintenance of                        On December 31st, 2008, the validity of the Collec-
     112                   the Tlc plants which require attention at a high                  tive National Work Contract (CCNL) for personnel in
   INTERNAL                altitude (telegraph poles, ladders and pylons).                   telecommunications businesses expired. Negotia-
STAKEHOLDERS               These programs have made possible a reduc-                        tions for its renewal, begun in January, 2009, with

human resources            tion of work related accidents in this area                       coordination by the trade association Asstel, led to
                           equal to 1.6%;                                                    the signing, on October 23rd, of the new CCNL for
                           The Project “Drive Safely”, in its third year of                  the years 2009-2011. Speci cally the Contract pro-
                           activity, has allowed the attainment of a nota-                   vides for:
                           ble reduction in the accident index related to                          the adjustment of minimum salaries on the
                           road accidents whilst in service. In fact, only                         basis of the IPCA;
                           in the last year, the reduction has been equal                          the updating of all the institutions regarding
                           to 7.26%, whilst in the last three years it has                         the labour market, incorporating the latest leg-
                           been reduced by some 40%.                                               islative amendments;
                           The training program has included, via a video                          the institution of a form of supplementary
                           course, the entire workforce of Telecom Italia                          health assistance for all workers of the sector;
                           and through a pluriannual program, the tech-                            the increase in leave days for student-workers;
                           nical personnel who use a company vehicle                               the establishment of a bilateral agency for sec-
                           intensively in everyday activities (in 2009 this                        tor training which will arrange the provision of
                           was 613 technicians).                                                   a catalogue of courses on the subjects of the
                                                                                                   environment and safety at work, a responsibil-
                  During the year, we also recorded an increase in                                 ity under the law 231/2001, regulations on
                  non-work related accidents, not connected to work-                               matters of privacy, basic computing and basic
                  ing activities, and two fatal accidents, of which one                            language training, work relations, CCNL and
                  was work related.                                                                social security.

                  For 2010, speci c targets for reduction have been                          In addition, the Contract has introduced a new and
                  provided (see Introduction/2010 Objectives)                                more multifaceted system of relations between com-
                                                                                             panies and unions, according to European Commu-
nity guidelines. Indeed, the Observatory on Remote        de nition of the position on matters of training and
Control and the National Forum, the leading centres       information for workers and the RLS.
of analysis, veri cation and discussion between the
parties on the issues of nancially dynamic, tech-         Following the earthquake of L’Aquila, making the
nological development in the sector, the evolution        company of ces inoperable, on April 7, the Company
of legislative activities, relations with consumer as-    and the Union subscribed to the joint examination
sociations, social corporate responsibility, the labour   under article 5, paragraph 1, of the law 164/75,
market, equal opportunities and safety at work.           activating for a period of four weeks the Ordinary
The new system of industrial relations will further       Temporary Unemployment Compensation for 62
encourage the dialogue between Telecom Italia and         workers. Furthermore, the company has provided
Trade Union Organisations.                                instruments of further economic support, thereby
                                                          enabling workers to manage the problems caused
In the months of January and February, with succes-       by the earthquake, assured of income and free from
sive in-depth meetings, the Company explained to          usual daily work activities.
the Trade Union Organisations the organisational
considerations in the Strategic Plan, 2009-2011. In       Still in 2009, on October 12th, Companies and Un-
the context of the subsequent changes to the work-        ions de ned the 2009-2010 calendar of the collec-
force, a mobility procedure was launched on May           tive holidays, identifying the days and the company
25 under law 223/91 for 470 workers operating             structures involved in the closures (so-called non-
in the Directory Assistance sector (Service 1254,         operative structures).
Data Lists Assurance, Exchanges, International Work
Services Centre, Territorial Support). On July 21st,      According to the provisions of the Accord signed be-
the Company renounced the recourse to mobility            tween the Company and Trades Union Organisations              113

and stipulated with the Trades Union Organisation,        on May 14th, 2008, on the issue of Performance-             INTERNAL
at the Ministry of Labour, a Contract of Solidarity of    Related Pay, on May 5th an agreement was signed          STAKEHOLDERS
the “defensive” type, under the legal measures in         with SLC-CGIL, FISTEL-CISL, UILCOM-UIL, the National     human resources
force, regarding the workers concerned. This Con-         RSU and UGL Telecommunications Coordination,
tract provides for the reduction of the working hours     which de ned the organisational macro- elds and
to avoid, wholly or in part, the reduction or the dec-    the parameters of quality/productivity required for
laration of redundancy of personnel. For the workers      the de nition of the Performance-Related Pay, 2009-
in question, a partial integration is envisaged, by       2011, of Telecom Italia S.p.A. This agreement allows
INPS, of the payment not received due to the reduc-       for a more direct correlation between the contribution
tion in working hours.                                    to the results of the business by speci c groups of
                                                          workers, encouraging the involvement of the workers
On February 5th, 2009, speci c agreements were            and a greater sense of belonging to the business.
on conducting the elections of the Unitary Union          As envisaged by the CCNL and the Protocols of In-
Representative Body (RSU) and Health and Safety           dustrial Relations of Company and Trades Unions,
representatives (RSL), on conformity with union           during the year numerous meetings were held at
standards and on the Joint Health and Safety Com-         the national level on many issues, including: the
mittees. The latter, in order to maintain the par-        contracts signed by the Company with suppliers
ticipatory system as the preferred instrument for         and partners, the new reference model for company
veri cation, analysis and discussion, are composed        training, the reorganisation of important company
of an equal number of company and union mem-              structures such as the Technology & Operations
bers. Their task is to adopt initiatives aimed at the     Management and the Security Department, the
protection of the health and the physical integrity       process of professional mobility from staff areas to-
of the workers, to examine the development of the         wards operational structures.
phenomena of accidents and where necessary pro-
pose actions of improvement, to contribute to the         On January 22nd, an understanding was reached with
                  SLC-CGIL, FISTEL-CISL, UILCOM-UIL and the RSU of          Finally, as regards Telecom Italia Sparkle S.p.A., on
                  Matrix S.p.A. on the second level of negotiations, un-    October 29th, 2009, the new company organisation-
                  der which improved treatment was de ned for work-         al model was presented to the Trades Union Organi-
                  ers compared to that provided by the CCNL, according      sations and the agreement was signed on collective
                  to the guidelines already adopted by Telecom Italia       holidays for 2010.
                  S.p.A. On December 16th, 2009, furthermore, the es-
                  tablishment of Performance-Related Pay for the work-      In Tim Brasil, the collective union agreements of
                  ers of Matrix S.p.A. was signed with the same Trades      2009 are in line with the current economic, political
                  Union Organisations, which links the variable part of     and juridical situation of the country. Three agree-
                  the pay to the progress of the company’s earnings.        ments have been negotiated by TIM Brazil with the
                                                                            two federations that represent the entire work forc-
                  As regards Shared Service Center S.c.r.l., on March       es, FITTEL and FENATTEL, concerning:
                  17th, 2009, a supplementary agreement of the                    economic and social conditions;
                  National Collective Agreement was signed with SLC-              the company’s pro t-sharing programme;
                  CGIL, FISTEL-CISL and the RSU, which set a one off              the hourly rate of pay. On the basis of these
                  payment for all workers covered by the Performance-             agreements, overtime hours may be met by
                  Related Pay Award of 2008. On May 21st, further-                a reduction in the normal working hours or
                  more, negotiations were launched to de ne the                   through days off in the three months following
                  Award for 2009 with the company’s RSU and the Na-               the completion of the overtime. After that pe-
                  tional Secretaries of the SLC-CGIL, FISTEL-CISL and             riod, the hours will be paid.
                  the UILCOM-UIL, which led to the signing, on Decem-
                  ber 18th, 2009, of a speci c understanding.               In 2008, the reduction of the working week from 44
     114                                                                    to 42 hours in 2009, and 40 hours a week in 2010,
   INTERNAL       As regards the industrial relations activities con-       was agreed in negotiations.
STAKEHOLDERS      ducted by TI Media:                                          Finally, wages will be increased by 4.17% from

human resources         on February 2nd, 2009, an understanding was         January, 2010.
                        reached with the journalists’ Trades Union
                        Organisations with regard to the procedure
                        of collective dismissal regarding 25 journal-
                        ists, which occurred in September, 2008. The
                        agreement, reached through the institution of       The policies of remuneration in 2009 were directed
                        a solidarity contract, revokes the procedure        at ensuring competitiveness in the labour market, in
                        of collective dismissal, lasts two years, from      line with the objectives of attracting, developing and
                        March 1st, 2009, to February 28th, 2011, and        fostering loyalty in the workforce, as well as pay dif-
                        provides for the reduction of working hours         ferentials from the perspective of internal coherence
                        and pay by 16%. The reduction in pay will be        and on the basis of shared, objective criteria.
                        compensated, to the amount of 50%, by a                Therefore, the remuneration systems are de-
                        speci c indemnity distributed by the National       signed to appreciate, in a differentiated way, the
                        Institute for the Welfare of Italian Journalists    contribution in relation to the degree of coverage
                        (INPGI) which also provides for the accredita-      and the importance of the role, the strategic nature
                        tion of the notional contributions;                 of the competence possessed and individual value,
                        on October 15th, 2009, an agreement was             in line with market practices.
                        signed with the national and territorial RSUs of
                        TI Media, UILCOM UIL and FISTEL to raise the        The management of the xed components is inspired
                        overall limit laid down by law for the maximum      by criteria of ever greater selectivity in the pool of
                        duration of the xed-term contract from 36 to        resources concerned, consistent with the instruc-
                        63 months overall. The agreement has, moreo-        tions contained in the Industrial Plan, 2009-2011.
                        ver, regulated certain aspects in matters of hir-   The variable component in remuneration has been
                        ing on xed-term contracts.                          established as a distinctive element, with ever closer
correlation between the remunerative package and            cars producing less CO2 emissions).
the performance and revenue of the company.
   The MBO (Management By Objectives) 2009                  Tim Brasil guarantees that the remuneration of its
system, the sole instrument of formal, short term           employees is in line with the internal levels of sen-
incentives, aimed at the management and particu-            iority in the company and market standards. The sal-
larly valuable employees, has con rmed, in continu-         ary policy includes xed and variable remuneration
ity with 2008, the importance of the company and            connected to the company results.
departmental macro-economic objectives.                        In addition to the MBO programme and the in-
                                                            centive programme for the sales force, Tim Brasil
To ensure aspects concerning Sustainability re-             has adopted the “Participação nos Lucros e Re-
ceive appropriate consideration in decisions by the         sultados” (PLR), under which a part of the com-
Group’s management, objectives regarding the MBO            pany’s pro ts is redistributed among employees, as
system have been de ned by Telecom Italia and are           required under a federal law. These programmes
reproduced for stakeholders in the following table.         have proved to be useful instruments in improving
                                                            the quality of the service and productivity.

 STAKEHOLDER         TARGETS SUBJECT                        Stock options
                                                            The instrument of stock options has been used

 Customers           Customer Satisfaction
                                                            within the Telecom Group in order to retain and offer
                     Quality of the service delivered       long term incentives to members of management.
                     Perceived quality of the service

 Human Resources     Health and safety of employees
                                                            Telecom Italia
                     Programmes of training and pro-
                     fessional growth                       In the course of 2009, the deadline passed for exer-         115
                     Welfare activities (People Caring)
                     and the wellbeing of employee
                                                            cising options relative to:                                INTERNAL
                                                                  the second lot of the 2002 stock option Plan;     STAKEHOLDERS
 The Environment     Consumption of materials, energy
                     and water                                    the second lot of the 2002 stock option Top       human resources
 Shareholders and    Quality and speed of company                 Plan;
 Institutions        information delivery                         the second lot of the 2003-2005 stock option
 The Community       Organisation of cultural exhibitions         Plan (ex TIM).
                     Quality of initiatives/projects for
                     the Community
                                                            In addition, the exercising of options of existing
                                                            Plans was suspended at the Shareholders’ Meeting
                                                            from March 23rd, 2009 to April 17th, 2009, in ac-
Regarding the non-monetary component of the re-             cordance with the relevant Regulations.
muneration package, its valuation has continued
in 2009 with reference also to potential impact in          The essential elements of the stock option plans of
terms of caring for employees (the provision of mo-         Telecom Italia are summarised in the Note “Stock op-
bile handsets with evolved functions) and attention         tion Plans and Performance Share Granting Plan” in-
to the environment (the broadening of the eet with          cluded in the Telecom Italia Group’s Annual Report.
        Correct information to all.



STAKEHOLDERS     The companies of the Group are fully aware of the        The Investor Relations (IR) department manages the

  shareholders   importance of supplying accurate information about       day to day relations with the key stakeholders: im-
                 their activities to the market, investors and the Com-   portant shareholders, institutional and retail inves-
                 munity in general.                                       tors, bondholders, socially responsible investors and
                    While observing the requirement for con dential-       nancial analysts.
                 ity in the conduct of business, the companies of the        Their shared expectations concern:
                 Group keep the market and investors informed on               reinforcement of the positioning in the mar-
                 the basis of the criteria of transparency, courtesy,          kets in which the Group operates;
                 clarity and equal access to information.                      con rmation of the objectives reported to the
                    The companies of the Group are committed to                market through the Strategic Plan;
                 ensuring equality in the treatment of all categories          certainty in receiving a quick, effective re-
                 of shareholders, without preference.                          sponse from the company to requests for in-
                    The advantages inherent in belonging to a Group            formation.
                 of businesses are clear in the application of the
                 regulatory framework and in the autonomy of each         The expectations of the stakeholders are given spe-
                 Company with regard to the revenue from its activity     cial consideration:
                 and the creation of value for its shareholders. Spe-
                 cial attention is also reserved to the management
                 of the relations with the bondholders: for more than
                 a year, the Investor Relations department has rein-
                 forced its organisational structure through the crea-
                 tion of a dedicated watchdog.
  STAKEHOLDER                                         NEED

  Important shareholders                              Good nancial and operational performance by the company
                                                      Total positive shareholder return (performance on the stock market of the
  Institutional and retail investors                  shares and dividends distributed)
                                                      Involvement in the life of the Group (for example, participation in events)
                                                      Brand reputation

  Socially responsible investors                      Total positive shareholder return
                                                      Attention to the social and environmental impact of the company business

  Bondholders                                         Stability of the yield from the investment
                                                      Certainty of payment
                                                      Maintenance/improvement in the debt ratings

  Financial analysts                                  Direct contact with the management on important issues to better perceive
                                                      present and future dynamics

                                    Other shareholders           Abroad
                                    Italy                        0.08%
                                    20.95%                                           telco
                               Abroad                                                        Telecom Italia
                               4.12%                                                         1.21%
                               persons                                                                                                    117
                               Italy                                                      Institutional
                                                                                          shareholders                                 INTERNAL
                               1.70%                                                      Italy
                                    Institutional                                         14.13%
                                    shareholders                                                                                      shareholders
(*)   Source: Shareholders’ ledger at December 31st, 2009, sup-
      plemented by communications received and from other available

                                                                        attention to ethical, social and environmental factors
                                                                        as well as nancial aspects. The communication to this
In the course of 2009, the Company organised three-                     particular category of investor, administered in concert
monthly conference calls, road shows abroad, meetings                   with the Group Sustainability department, is developed
at the Group’s institutional centres (reverse road shows)               through individual contacts and participation at dedi-
and participated in sector conferences. Around 300                      cated events. In 2009, a road show was organised in
investors were met during these events. In addition to                  Frankfurt during which several issues were touched on,
these events, direct meetings and telephone conversa-                   such as the extent of the planned investments in the
tions on a daily basis should be taken into account.                    development of the NGN (Next Generation Network)
      The responses to the nancial market by the Group                  and the NGN2, and the environmental performance in-
are based on the criteria of relevance, the sensitiveness               formation concerning energy consumption, demateriali-
of information, the congruence and topicality of the is-                sation and other sustainability indicators.
sues dealt with to the Group structure and the actions
undertaken to achieve the targets of the Strategic Plan.                Regarding relations with individual shareholders
                                                                        (retail) – today there are nearly 600,000 holders of
The nancial communication also takes into considera-                    ordinary shares – Telecom Italia’s strategy is aimed
tion the needs of investors linked to Socially Responsi-                at increasing channels of communication to respond
ble Investing (SRI), which favours companies that pay                   in a rapid and effective way to queries about the per-
                 formance of the shares and, more generally, of the        integrated process of risk management inspired
                 Group. The indications and ideas that emerged from        by the Enterprise Risk Management Framework
                 the dialogue with the retail investors were collected     (ERM)(1). This is an instrument of governance of
                 and communicated to top management.                       company risk, through which the identi cation, as-
                    The Shareholders’ Club, “TI Alw@ys ON” (www.           sessment and management of risks is achieved.
                 telecomitaliaclub.it) was launched in 2006 as a virtual         At the heart of the system is the Committee of
                 meeting place between the company and its individual      Group Risk Management which, in the new organisa-
                 investors. However, the Club is also open to those who    tional model, from April 9th, 2009, is supervised and
                 do not have shares in the Group, and just by joining      coordinated by the Manager of the “Administration, Fi-
                 the Club, members can obtain the same free services       nance and Control” Department, and is made up of:
                 that are reserved to shareholders, that is:                        the Managers of the Departments, “Domestic
                       SMS alert, which every day reports the closing               Market Operations”, “Technology & Opera-
                       price and the percentage variations of Telecom               tions” and “International Business”;
                       Italia’s ordinary and savings shares compared                the Managers of the Departments “General Coun-
                       to the previous day, as well as the daily per-               sel & Corporate and Legal Affairs”, “Administra-
                       centage variations in the FTSE/Mib index;                    tion, Finance and Control”, “Human Resources
                       Weekly Market report: a summary of the                       and Organization”, “Purchasing” and “Security”;
                       week’s progress, sent every Friday evening fol-              the Manager of the “Risk Management” depart-
                       lowing the close of trading on the markets;                  ment of “Administration, Finance and Control.”
                       Three monthly newsletter: contains a commentary
                       on the most recent economic- nancial results and    The Manager of the Risk Management department
                       a focus on the phenomena and the trends which       carries out the role of supporting the coordination of
      118              have in uenced the course of the results, as well   the Committee.
   INTERNAL            as clari cations on the nancial and industrial            The Committee meets every three months (or
STAKEHOLDERS           strategy adopted by the top management.             when speci cally required) and aims to ensure the

  shareholders                                                             administration of the process of managing the risks
                 In addition to these services, Telecom Italia offers      of the Group, coordinating the preventative action
                 shareholders the “Guide to the Individual Sharehold-      plan, which is designed to ensure the operational
                 er,” an in-depth document about the Group, available      continuity of the business, and monitoring the effec-
                 on request and on the website, as well as constant        tiveness of the counter measures adopted.
                 updates through the press releases (institutional,              The new ERM approach, approved by the Risk
                 concerning products, nancial).                            Management Committee, is based on the assess-
                    As regards on line nancial communication,              ment of the risk pro le by management, both in
                 Telecom Italia’s website (www.telecomitalia.it) is        relation to company processes and the strategic ob-
                 constantly updated with regular innovations. The          jectives. This approach provides the mapping of the
                 Investor Relations section of the site has achieved       risks and puts the focus of those held to be most im-
                 a good placing again this year (3rd in Europe, 5th in     portant, the drawing up of a Master Plan of actions of
                 Italy) in the classi cation drawn up by Hallvarsson &     mitigation and actions to handle the risks through the
                 Halvarsson, the Swedish company that is the leader        establishment of an interdepartmental work group, se-
                 in on line nancial communication.                         lected by the Group Risk Management Committee.

                                                                           In detail, the ERM provides four main phases:
                                                                             1. analysis:
                                                                             2. evaluation;
                 To ensure a global approach to risk management              3. processing and veri cation;
                 and at the same time greater exibility, in 2009             4. reporting.
                 Telecom Italia Group launched a review of the Risk
                 Management System previously used (the CRSA –
                                                                           (1)   Enterprise Risk Management, 2004, by the Committee of Spon-
                 Control & Risk Self Assessment), adopting a new                 soring Organizations of the Treadway Commission.
  1. The analysis phase is based in its turn on two                       proper management of the company process-
         sub-phases:                                                      es and to reach the respective objectives.
         a. a preliminary analysis which envisages:                       b. The identi cation of the risk owners: the
              the mapping of the company processes                             risks identi ed are assigned to the owner
              and the identi cation of the associated                          department of the sub-process that is
              sub-processes;                                                   subject to the analysis. This department is
              the matching of the company departments                          responsible both for the evaluation of the
              to the sub-processes ;    (2)
                                                                               existing measures of mitigation, and the
              the disclosure by the Industrial Plan of the                     de nition of the action plan regarding the
              strategic objectives;                                            risks for which, in the gap analysis phase,
              the disclosure of the short-term incentives                      adequate mitigation is not encountered.
              (MBO) of the objectives of cross-company                    c. Approval of the action plan: the Risk Man-
              governance.                                                      agement committee, supported by the
         b. the identi cation of the risks, which fol-                         Risk Management department, supervis-
              lows a top-down logic: the rst reports of                        es the protection indicated by the owner
              the Chief Executive Of ce and the Chair-                         department and approves the action plan
              man are interrogated, as well as certain                         proposed. The implementation of the
              secondary reports (the so-called Risk                            measures of prevention or reduction of the
              Owners) which identify the risks within the                      risk is subject to the appropriate evalua-
              range of a speci c model of the telecom-                         tion and a detailed cost/bene ts analysis.
              munications sector. The sources of risk                 3. The processing and veri cation phase envis-
              identi ed may be both external and inter-                   ages the establishment of interdepartmen-
              nal (the latter are divided into strategic,                 tal work groups to monitor the action plans               119

              operational and nancial). The risks identi-                 approved by the Risk Management commit-                INTERNAL
               ed are connected to the statutory com-                     tee. The monitoring activity on the state of        STAKEHOLDERS
              pany processes and objectives.                              progress and/or completion of the action plan,        shareholders
  2. The evaluation phase envisages:                                      together with the Key Risk Indicators (KRI),
         a. the evaluation of the risks, based on a                       supplies a ow of data to the Committee which
              methodology which takes into considera-                     aids the de nition of the subsequent cycle of
              tion quantitative and qualitative criteria. In              Risk Management.
              particular, the following are identi ed:                4. The reporting phase provides a ow of informa-
              the impact: from a minimum 1 (negligi-                      tion on the structure of the risk pro le and its
              ble) to a maximum 5 (catastrophic), which                   development according to a exible schedule,
              measures the consequences of the event                      de ned on the basis of the needs of the stake-
              on the objective/process. The evaluation                    holders.
              carried out by the risk owner, although rep-           The process is updated on an annual basis (or more
              resenting a qualitative datum, is the fruit            regularly) at the discretion of the Risk Management
              of the association of the judgement with               Committee. Responsibility for the updating and sup-
              scales of quanti ed values in economic- -              port belongs to the Risk Management department.
              nancial terms (EBITDA, net Capex, Custom-              The introduction of a digital system is being evaluat-
              er Satisfaction Index, Market Share etc.);             ed, supplied with information by the risk owner and
         the probability: from a minimum 1 (improbable)              managed by the Risk Management department.
         to a maximum 5 (very probable), which meas-                    On December 31st, 2009, the Group’s Corporate
         ure the degree of uncertainty of the event.                 Risk Pro le was de ned (excluding Tim Brasil) which
         On the basis of the evaluation carried out,                 signalled the completion of the analysis phase and
         the most important risks are identi ed for the              part of the evaluation phase (risk assessment and
                                                                     allocation). Completion of the subsequent phases is
(2)   The charting of the processes/departments is updated every     expected in the next cycles.
      three months by the Human Resources and Organisation depart-
      ment and conveyed to the Risk Management department.              In particular, in the 2009 cycle, attention was
                 focused on a group of signi cant risks (the so-called     ten ordinary or savings shares, respectively, repre-
                 Top Risks) regarding which the phases of the de ni-       sented by American Depositary Receipts issued by
                 tion of the Master Plan, treatment and veri cation,       JPMorgan Chase Bank.
                 will be pursued.                                                Details of the existing Telecom Italia stock option
                                                                           plans and the capital increases serving these plans
                                                                           can be found in note 42 of the Company’s separate
                                                                            nancial statements as of 31 December 2009, and
                                                                           in the publicly available information documents,
                 An excerpt is given below from the “Report on             in accordance with Art. 84-b of the Consob Issuer
                 Corporate Governance and Ownership Structure of           Regulations.
                 Telecom Italia S.p.A.” (also referred to as the “Re-
                 port”), published in a separate document of the           Restrictions on the transfer of securities
                 same name, which should be consulted for the full         No statutory limitations exist on the free disposal
                 text. This, and all the other documents mentioned         of securities, except that laid down in Art. 22 of the
                 below – the principles, codes, procedures, guide          Bylaws regarding the special powers of the Minister
                 lines, charts and tables – can be found at the Com-       of Economy and Finance, under Law 474/1994,
                 pany’s website: www.telecomitalia.com, “corporate”        which include the power to oppose the acquisition
                 section, under the heading, “governance” (see in          of shareholdings greater than 3% of the capital with
                 particular the item “Annual Report on corporate gov-      the right to vote.
                 ernance” under the heading “governance system”,
                 where all the annual reports on corporate govern-         Major shareholdings
                 ance – starting from the scal year 2003 – are             Based on the information available, the following are
      120        given), and “investors”.                                  the major holdings of ordinary capital in Telecom Italia:
STAKEHOLDERS     Pro le                                                                                 TYPE OF            % OF            % OF
                                                                             SUBJECT                    OWNER-        ORDINARY           VOTING
  shareholders   The Company’s corporate governance system con-                                            SHIP        CAPITAL          CAPITAL
                 sists of a series of principles, rules and procedures       Telco S.p.A.                  Direct       22.447%        22.447%
                 that are updated from time to time and adapted to           Findim Group                  Direct         4.999%         4.999%
                 regulatory changes and international best practices.        S.A.

                    As stated in previous Reports, this system fo-           Sintonia S.A.                 Direct         2.056%         2.056%

                 cuses on the guiding role of the Board of Directors
                                                                           (*)   On January 5th, 2010, the quota held by Sintonia S.A. fell to
                 in setting the strategic direction, on the transparen-          below 2%.

                 cy of the management decisions, both internally and
                 regarding the market, on the ef ciency and effective-     Notice is also given that the following companies
                 ness of the internal control system, on the strict reg-   have informed CONSOB that they hold Telecom Italia
                 ulation of potential con icts of interest and on clear    S.p.A. ordinary shares in their role as investment
                 rules of conduct in dealing with related parties.         management rms:
                                                                                    Brandes Investment Partners LP: gave notice
                 Information on the organisation of assets                          it held 4.024% of the total ordinary shares of
                                                                                    Telecom Italia S.p.A., on July 23rd, 2008;
                 Structure of the share capital                                     Alliance Bernstein LP: gave notice it held
                 Subscribed and paid up share capital is given in Ta-               2.069% of the total ordinary shares of Tel-
                 ble 1, attached to the full text of the Report.                    ecom Italia S.p.A., on November 14th, 2008;
                    Savings shares are regulated by Art. 6 of the                   Blackrock Inc. gave notice it held 2.823% of
                 Bylaws.                                                            the total ordinary shares of Telecom Italia
                    The company’s ordinary and savings shares are                   S.p.A., on December 1st, 2009.
                 listed on the Italian Stock Exchange (Borsa Italiana),
                 and on the New York Stock Exchange in the form of         Securities conferring special rights
                 American Depositary Shares, each corresponding to         No securities have been issued conferring special
rights of control.                                         tal, under Art. 22 of the Bylaws, the voting rights
   As currently established, the special powers of         of the shares of major shareholders is suspended.
the Minister of Economy and Finance under Law              Equally, if the power to object is exercised, voting
474/1994, referred to in Art. 22 of the Bylaws, are        rights may not be exercised.
as follows:                                                   Voting rights are not assigned to savings shares
        To object to the acquisition of holdings equal     during ordinary shareholders’ general meeting, as
        to or greater than 3% of the share capital         laid down by Italian regulations.
        represented by shares with the right to vote
        in ordinary shareholders’ meetings. Should         Shareholder agreements
        the Minister believe that the transaction is       The principal shareholder of Telecom Italia is Telco
        prejudicial to the vital interests of the state,   S.p.A. (Telco),whose shares, in turn, are currently
        the objection must be made, giving reasonable      held by: Intesa Sanpaolo S.p.A., Mediobanca S.p.A.,
        justi cation, within ten days of the date of no-   companies belonging to the Generali Group and Tel-
        ti cation by the Company at the time the buyer     efónica S.A.
        applies for entry in the shareholders’ register.
        The vendor may appeal against the ruling to        According to information in the public domain, on
        the Lazio Regional Administrative Court within     April 28th, 2007, the shareholders of Telco (which
        sixty days;                                        then incorporated Sintonia S.A.) entered into a
        To veto on the grounds of substantial prejudice    shareholder agreement that identi ed, among other
        to state interests, the adoption of resolutions    things, the criteria for drawing up the list of candi-
        to dissolve the Company, transfer the busi-        dates as directors of Telecom Italia:
        ness, merge or divide the Company, transfer              Telefónica would be entitled to designate two
        the registered of ce outside Italy, change the           candidates for as long as it held at least 30%              121

        company purpose and eliminate or modify                  of Telco’s share capital;                                INTERNAL
        the special powers themselves. Dissenting                Other Telco shareholders would be entitled            STAKEHOLDERS
        shareholders may appeal against the veto to              to designate the other candidates on the list,          shareholders
        the Lazio Regional Administrative Court within           three on the basis of unanimity, and the oth-
        sixty days.                                              ers on a proportional basis, for as long as they
                                                                 held an absolute majority of the share capital.
Under the Prime Ministerial Decree (DPCM) of June
10th, 2004, the special powers can only be exer-           The shareholder agreement laid down that the Tel-
cised on the grounds of signi cant and compel-             ecom Italia Group and the Telefónica Group were to
ling reasons of public order, safety, security, health     be operated autonomously and independently. In
and defence, in certain cases of danger, involving,        particular, the Directors appointed by Telefónica to
among other things, continuity in the provision of a       Telco and Telecom Italia receive instructions from
public service or the safety and security of facilities    Telefónica not to participate or vote in board meet-
and networks in essential public services.                 ings involving discussions and resolutions on the
                                                           policies, management and operations of companies,
Shareholdings of employees: mechanism for exer-            directly or indirectly controlled by Telecom Italia, that
cising voting rights                                       provide services in countries where Telefónica’s right
No employee shareholding programmes are in exist-          to vote is subject to legal or regulatory restrictions
ence.                                                      or limitations.

Restrictions on voting rights                              On November 19th, 2007, the agreement was modi-
There are no restrictions on voting rights for shares       ed in accordance with the measure adopted by
constituting the ordinary share capital of Telecom         the Brazilian telecommunications authority (Anatel),
Italia. However, pending expiry of the term for ex-        issued on October 23rd, 2007 and published on
ercising the power to object to the acquisition of         November 5th, 2007 (the ‘Anatel Decision’), which
shareholdings greater than 3% of the ordinary capi-        laid down that:
                      Telefónica and its directors/of cers shall not         In line with this, the Directors, Messrs Alierta
                      participate, vote or exercise vetoes in Telecom     and Linares, have undertaken not to participate in
                      Italia’s shareholders’ meetings, board of direc-    discussions or voting in the Board (nor in the Ex-
                      tors’ meetings, committees and bodies with          ecutive Committee) when considering proposals or
                      similar powers to Telco, or those of any other      subjects involving the activities of Telecom Italia,
                      company controlled by Telecom Italia when           or subsidiaries, within the Brazilian and Argentine
                      deliberating upon subjects relating to the per-     telecommunications markets, nor – in general – in
                      formance of telecommunications activities           any case that could be prejudicial to Telecom Italia
                      within the Brazilian market. Furthermore, Tele-     Group.
                      fónica shall not designate directors or of cers
                      (i) of companies controlled by Telecom Italia       On October 28th, 2009, Sintonia S.A. requested a
                      established in Brazil that provide telecommu-       non-proportional spin-off of Telco, under the share-
                      nications services within the Brazilian market,     holder agreement.
                      or (ii) of companies established in Brazil that        On that date, the parties to the agreement,
                      control such suppliers of telecommunications        except Sintonia S.A., entered into a renewed, modi-
                      services;                                            ed agreement (which remains in force until April
                      Telefónica shall ensure that subsidiaries pro-      28th, 2010) agreeing the renewal for a further three
                      viding telecommunications services within           years, and so effective from April 28th, 2010, until
                      the Brazilian market do not enter into speci c      April 27th, 2013, with the right to terminate be-
                      types of relationships with Telecom Italia          tween April 1st and 28th, 2011, with the possibil-
                      subsidiaries providing telecommunications           ity to extend – under certain circumstances – until
                      services within the Brazilian market on terms       May 5th, 2011. It was further agreed to discuss
      122             and conditions other than those laid down by        with Sintonia S.A. procedures that would enable it to
   INTERNAL           Brazilian regulations applicable to telecommu-      withdraw from the capital of Telco as an alternative
STAKEHOLDERS          nications services;                                 to the spin-off.

  shareholders        Telefónica, even where it may exercise the             Given the above, on December 22nd,2009,
                      right to acquire Telco shares, shall not exer-      Sintonia S.A. acquired from Telco Telecom Italia’s
                      cise direct or indirect control over any subsidi-   275,115,716 ordinary shares (2.06% of the compa-
                      ary of Telecom Italia in Brazil;                    ny’s ordinary share capital) and Telco acquired Sinto-
                      Parties to the agreement shall instruct those       nia S.A.’s entire holding in the Telco’s share capital,
                      members of the Board of Directors of Telco          ending its participation.
                      that each appoint, as well as to the members           As of December 31st, 2009, the signatories to
                      of the Board of Directors of Telecom Italia         the agreement and the stakes held by each in the
                      designated by Telco, (i) to prepare separate        capital of Telco were as follows: Telefonica S.A.
                      agendas for the meetings of the boards of           (46.18%), Assicurazioni Generali S.p.A. (12.98%), In-
                      directors of Telco, Telecom Italia and Telecom      tesa Sanpaolo S.p.A. (11.62%), Mediobanca S.p.A.
                      Italia International N.V., or of any other com-     (11.62%), Alleanza Toro S.p.A. (6.76%), Ina Assitalia
                      pany established outside of Brazil and control-     (6.21%), Generali Lebenversicherung A.G. (2.36%)
                      led by Telecom Italia with investments in the       and Generali Vie S.A. (2.27%).
                      Brazilian telecommunications sector in which
                      the participation of directors designated by        When the agreement was renewed (October 28th,
                      Telefónica is allowed but not their participa-      2009), Telco and Telefónica also agreed to extend
                      tion in meetings, and (ii) to provided to Anatel    until April 27th, 2013, the latter’s purchase option
                      within 30 days copies of the agendas and of         in the event of dissent over the Telco board of direc-
                      the minutes of the meetings referred to in the      tors’ decision to transfer the Telecom Italia shares
                      preceding point.                                    in the company portfolio. In this case, Telefónica
                                                                          could alternatively acquire Telco’s Telecom Italia
                 The restrictions and limitations referred to above       shares at the same price and under the same condi-
                 shall also be applied to any Telco spin-off.             tions offered by any interested third party, or else
request the spin-off of Telco.                            late to nancial relationships:
                                                               Multi currency revolving credit facility
On January 11th, 2010, Telefónica S.A., Assicurazi-            (8,000,000,000 euros). This agreement was
oni Generali S.p.A., Intesa Sanpaolo S.p.A., Me-               stipulated between Telecom Italia and a bank
diobanca S.p.A., Alleanza Toro S.p.A., Ina Assitalia           syndicate on August 1st, 2005 and subse-
S.p.A., Generali Lebenversicherung A.G. and Gen-               quently amended. In the event of a change of
erali Vie S.A. signed a supplementary agreement to             control, Telecom Italia must inform the agent
the shareholder agreement:                                     within 5 business days, and the agent, on
      con rming their nancial support to Telco;                behalf of the nancing banks, must negoti-
      agreeing the methods by which such nancial               ate in good faith on the continuance of the
      support would be provided when necessary                 relationship. None of the parties is obliged to
      in accordance with the nancing agreement –               continue such negotiations beyond 30 days,
      backed by collateral of Telecom Italia ordinary          at which point, in the absence of any agree-
      shares – signed on that date between Telco               ment, the facility shall cease to be effective
      and a pool of nancial institutions;                      and Telecom Italia will be obliged to return
      regulating the method of exercising the right            such sums as may have been disbursed to it
      to acquire the Telecom Italia ordinary shares            (currently equivalent to 1,500,000,000 euros).
      available to the nancial institutions if the col-        Usually, a change of control will not arise in
      lateral were to be called in.                            cases where control, within the meaning of
                                                               Art. 2359 of the Italian Civil Code, is acquired
Change of control clauses                                      (i) by shareholders who, on the date the agree-
The duty to give notice of change of control is laid           ment was signed, directly or indirectly held
down by a series of agreements to which Telecom                more than 13% of the voting rights in share-              123

Italia is party.                                               holders’ meetings or (ii) by investors (Telefoni-      INTERNAL
    This duty, which is enshrined in national legisla-         ca, Assicurazioni Generali, Sintonia, Intesa        STAKEHOLDERS
tion governing certi cates of permission, is primarily         Sanpaolo and Mediobanca), which stipulated            shareholders
incorporated in the general authorisation certi cates          a shareholder agreement on April 28th, 2007
permitting Telecom Italia to act as provider of the            concerning the Telecom Italia shares, or else
electronic communications network and offer elec-              (iii) by a combination of subjects belonging to
tronic communications services, as well as in the cer-         both categories;
ti cates of general authorisation/concession allowing          Revolving credit facility (1,250,000,000 eu-
its subsidiary, TI Media, to act as network operator           ros). This agreement was stipulated by Tel-
and supplier of content. A similar duty is enshrined in        ecom Italia and abank syndicate on February
local legislation and incorporated in the concession/          12th, 2010 and lays down a similar regime
license certi cates for telecommunications services            to that contained in the facility of August 1st,
granted to the foreign subsidiaries of the group.              2005, but was updated to incorporate the Oc-
    Telecom Italia is also party to agreements under           tober 28th, 2009 amendment to the share-
which a change of control would lead to the modi -             holder agreement of April 28th, 2007. No
cation or even dissolution of the relationship. Some           change of control therefore arises in cases
of these agreements, unrelated to nancial rela-                where the control, within the meaning of Art.
tionships, are subject to con dentiality restrictions          2359 of the Italian Civil Code, is directly or
where disclosure of the existence of the clause                indirectly acquired (through subsidiaries) by
would be seriously prejudicial to the company’s in-            the investors Telefónica S.A., Assicurazioni
terests, and the company therefore avails itself of            Generali S.p.A., Intesa Sanpaolo S.p.A. and
the facility of non-disclosure under Art. 123-b, para-         Mediobanca S.p.A., the provisions above re-
graph 1, letter h), second part, of the Consolidated           maining otherwise unchanged;
Finance Act. In other cases, the agreement is not              Bonded loans. The regulations on loans is-
deemed to be signi cant.                                       sued as part of the Olivetti or Telecom Italia
    This leaves the following cases, all of which re-          EMTN Programme, and loans denominated in
                       US dollars, usually lay down that, in the event    a weighted average price of between a minimum of
                       of mergers or transfers of all or the greater      €0.8942 and a maximum of €0.9686. Consob was
                       part of the assets of the issuer or guarantor      informed of this transaction on April 6th, 2009.
                       company, the incorporating or transferee com-      As of now. no authorisations exist for the procure-
                       pany must assume all of the obligations of the     ment of treasury shares.
                       incorporated or transferring company. Failure
                       to ful l the obligations, if not remedied, gives   Management and coordination
                       rise to a default event;                           Telecom Italia is not subject to management and
                       Contracts with the European Investment Bank        coordination within the meaning of Articles 2497, et
                       (EIB). In the contracts stipulated by Telecom      seq., of the Italian Civil Code.
                       Italia and the EIB, for a total maximum amount
                       of around €2.5 billion, there exists a duty to     Compliance
                       inform the Bank promptly of any modi cations       Telecom Italia adheres to the Self-Regulatory Code
                       regarding the Bylaws or any distribution of        of Borsa Italiana and, since 2000, it brought its cor-
                       capital among shareholders that could amount       porate governance system in line with the national
                       to a change of control. Any failure to provide     and international best practice, in accordance with
                       this information would lead to termination of      the recommendations of the Self-Regulatory Code
                       the contract, which also occurs should share-      of the Borsa Italiana, and the regulatory measures
                       holder holding less than 2% of the share capi-     introduced from time to time, keeping shareholders
                       tal at the date the contract is signed obtain      and the market constantly informed by means of the
                       more than 50% of the voting rights in ordinary     management report appended to the annual nan-
                       shareholders’ meetings or, in any event, of the    cial statements.
      124              share capital, where this, in the reasonable
   INTERNAL            judgment of the Bank, could be prejudicial to      As a foreign issuer registered with the US Securities
STAKEHOLDERS           the Bank or compromise the execution of the        and Exchange Commission and listed on the New

  shareholders          nancing project.                                  York Stock Exchange, Telecom Italia is also subject
                                                                          to US legislation. In this respect, as speci ed in the
                 Authorisation to increase the share capital and to       Self-Regulatory Code, the Board of Statutory Audi-
                 procure treasury shares                                  tors performs the duties of an audit committee.
                 The Shareholders’ Meeting of 8 April 2009 resolved
                 to empower the Directors to increase the share           The strategic subsidiaries of Telecom Italia include
                 capital, against payment in one or more instalments,     the companies of the Tim Brasil group, whose hold-
                 by issuing a maximum of 1,600,000,000 ordinary           ing company is Tim Participações S.A. (indirectly
                 shares, to be offered, in their entirety or in part:     controlled by Telecom Italia), a locally listed Brazil-
                       under option to the partners and to the hold-      ian company, registered with the US Securities and
                       ers of convertible bonds, or else                  Exchange Commission and listed on the New York
                       by subscription to the employees of Telecom        Stock Exchange.
                       Italia or its subsidiaries,                           The corporate governance structure at Telecom
                 as well as the power to issue convertible bonds, on      Italia is not subject to the legal provisions applica-
                 one or more occasions, for a maximum amount of           ble to Tim Participações S.A. Furthermore, in compli-
                 1,000,000,000 euros.                                     ance with the aforementioned measure adopted by
                    Following authorisation by the Shareholders’          Anatel on October 23rd, 2007, and the subsequent
                 Meeting of April 14th, 2008 for the procurement          measure adopted on July 7th, 2009 (which the Bra-
                 of treasury shares on the regulated markets by Oc-       zilian Authority ruled was in full compliance with the
                 tober 14th, 2009, for a maximum of 11,400,000            obligatory requirements), since 2007, Telecom Italia
                 ordinary shares, to service the stock option plan        has operated a speci c procedure formalising the
                 reserved for Senior Management, in the period be-        existing separation between Gruppo Telecom Italia
                 tween March 17th and 31st, 2009, 11,400,000              and Gruppo Telefónica activities in the Brazilian tel-
                 treasury shares were purchased on the market at          ecommunications market.
A similar internal procedure was adopted at the end           According to the provisions of the company’s
of 2008 to formalise the separation between Grup-          Self-Regulatory Code, carrying out the duties of a
po Telecom Italia and Gruppo Telefónica activities in      director of Telecom Italia is considered incompat-
the Argentine telecommunications market.                   ible with being a director or auditor of more than ve
                                                           companies, other than those managed and coordi-
Board of Directors                                         nated by Telecom Italia, controlled by or af liated to
                                                           it, that are
Appointment and replacement                                      listed in the FTSE/MIB index and/or
The company’s Bylaws (Art. 9) lay down that the                  operating predominantly in the public nancial
Board of Directors shall consist of no less than                 sector and/or
seven, and no more than nineteen, members, and                   carry out banking or insurance activities.
that they be appointed on the basis of lists submit-
ted by shareholders possessing a total of at least         Where executive positions in companies as de-
0.5% of the ordinary capital, lodged at the compa-         scribed above are held, the limit is reduced to three.
ny’s registered of ce at least fteen days before the       The Board of Directors has the power to decide to
date set for the rst convocation of the Sharehold-         the contrary, however (with public noti cation in the
ers’ Meeting.                                              annual report on corporate governance) even if this
   Four fths of the Directors to be elected shall be       departs from the stated criteria.
drawn from the list obtaining the highest number of           Should a Director hold of ce in several compa-
votes, according to the order in which they are list-      nies in the same group, only one position will be
ed, rounded down to the lower number in the case           taken into account for the purpose of calculating the
of uneven numbers. The remaining directors shall be        number of positions held.
drawn from the other lists. To this end, the votes ob-                                                                     125

tained by them shall then be divided by progressive        Composition                                                  INTERNAL
whole numbers from one up to the number of Direc-          The Shareholders’ Meeting of April 14th, 2008 ap-         STAKEHOLDERS
tors to be elected, and the share assigned to the          pointed the current Board of Directors, opting for          shareholders
respective candidates in the order in which they are       15 as the number of members, with a mandate of 3
listed. Shares of votes allocated in this way shall        years (and therefore until the meeting convened to
be arranged in descending order in a single list. The      approve the nancial statement on December 31st,
candidates with the highest shares are elected.            2010), authorising candidates to carry out the activi-
For Directors who, for any reason, have not been ap-       ties in line with their the respective curricula vitae,
pointed in accordance with the above procedure, the        thereby releasing them from the restraints on com-
Shareholders’ Meeting shall decide by the legally          petition under Art. 2390 of the Civil Code.
required majority.                                            In accordance with the applicable regulations,
   The provisions of Art. 9.7 of Telecom Italia’s          three lists (Telco List, Funds List and Findim Group
Bylaws lay down that the list of candidates to be ap-      List) were submitted, in line with the procedures and
pointed to the Board of Directors must be accompa-         time limits laid down by the Bylaws (see par. 4.1 of
nied by each candidate’s statement of acceptance           this Report). For information concerning candidates
of the candidacy, and by a declaration of the ab-          included in the Lists, the shareholders who submit-
sence of any reason of ineligibility or incompatibility,   ted the Lists and the quotas obtained by each List,
in addition to meeting the requirements laid down          please refer to the complete text of the Report.
and any other information required by the applicable          Twelve board members were drawn from the
rules and regulations and the Bylaws. Each candi-          Telco list, obtaining the majority of the votes cast,
date shall present, together with his declaration, a       according to the order in which they were listed:
curriculum vitae, demonstrating his personal and              Cesar Alierta Izuel, Tarak Ben Ammar, Franco
professional details and the administrative and man-       Bernabè, Elio Cosimo Catania, Jean Paul Fitoussi,
agerial of ces he has held at other companies and          Gabriele Galateri di Genola, Berardino Libonati, Julio
credentials of independence, in observance of the          Linares Lopez, Gaetano Miccichè, Aldo Minucci, Gi-
legal criteria and those established by the Company.       anni Mion and Renato Pagliaro.
                    As required by the Bylaws, three board members              to de ne the limits, methods and schedules
                 were drawn from the other two lists, speci cally,              of the reporting by the executive committee on
                 Luigi Zingales (taken from the Funds list), Paolo              the activity carried out;
                 Baratta and Roland Berger (taken from the Findim               to appoint the chairmen and managing direc-
                 Group list).                                                   tors of strategically important subsidiaries;
                    Following the resignation of Gianni Mion, the               to supervise the general progress of the man-
                 Board of Directors’ meeting on February 27th, 2009             agement, periodically comparing the results
                 co-opted Stefano Cao as company director, valid                achieved with the projections.
                 until the Shareholders’ Meeting to approve the
                 2008 nancial statement. Since, in this case, the          The following come within the scope of strategic op-
                 mechanism of the voting list (laid down only for the      erations subject to the prior approval of the board:
                 complete renewal of the Board under the company’s              agreements with the group’s competitors that
                 Bylaws) did not apply, the Shareholders’ Meeting               substantially impinge on the freedom of corpo-
                 appointed Stefano Cao as director for the remain-              rate strategic choices due to their objectives,
                 ing part of the mandate of the Board of Directors in           obligations, conditions and limitations; actions
                 of ce.                                                         and operations that include entry into (or exit
                    On December 22nd, 2009, Stefano Cao duly                    from) geographical and/or product markets;
                 handed in his resignation as director. The Sharehold-          industrial investments and disinvestments with
                 ers’ Meeting, convoked for April 28th/29th next, will          a value of more than 250 million euros;
                 make a decision following his resignation.                     the acquisition and disposal of companies or
                    The curricula vitae detailing the personal back-            branches of companies that are of strategic
                 ground and professional quali cations of the mem-              importance to the overall business activities,
      126        bers of the Board of Directors are available at the            or whose value exceeds 250 million euros;
   INTERNAL      Company’s website.                                             the acquisition or disposal of shares in sub-
STAKEHOLDERS        Tables 2 and 3, attached to the full text of the            sidiaries and associates with a value of more

  shareholders   Report, list information relating to the composition           than 250 million euros and, in any case, (even
                 of the Board of Directors as at April 12th, 2010, and          if the value is lower) in companies carrying
                 members who resigned during 2009.                              out activities that are part of the Group’s core
                                                                                business, and the stipulation of agreements
                 The role of the Board of Directors                             over the exercise of the rights attached to
                    Under Telecom Italia’s Self-Regulatory Code, the            these holdings;
                 Board plays an active role in providing strategic guid-        taking on nancing, including disbursing nanc-
                 ance for the company and exercising management                 ing and the issuing of guarantees in the inter-
                 control. The Code empowers the Board as a whole                est of non-subsidiary companies for amounts
                 to direct the company strategically with the responsi-         greater than 500 million euros;
                 bility to intervene directly in major decisions on the         any of the above operations when carried out
                 activities of the Company and the Group. Speci -               by the Group’s unlisted subsidiary companies,
                 cally, among other matters, the Board assumes the              except the subsidiaries of listed subsidiary
                 following responsibilities:                                    companies of controlled listed companies;
                       to examine and approve strategic, industrial             listing and delisting in regulated markets with-
                       and nancial plans, as well as the budget;                in and outside Europe of nancial instruments
                       to examine and approve strategic operations;             issued by the company or by group companies;
                       to assess the adequacy of the organisational,            instructions for the completion of operations
                       administrative and accounting structure with             of the nature described above that are issued
                       particular reference to the internal control             to listed subsidiary companies (and their sub-
                       system;                                                  sidiaries) in carrying out the management and
                       to draw up and adopt the company’s corporate             coordination activities of the parent company.
                       governance regulations and de ne the group’s
                       corporate governance guidelines;                    The assessment of management performance is
based on the continuous ow of information to non-          cussed were also noted down. The questions closely
executive Directors and Statutory Auditors, coordi-        re ected the observations made during the self-as-
nated by the Chairman of the Board of Directors.           sessment last year and were designed to thoroughly
This occurs periodically during various meetings           examine speci c areas, including: (i) the process of
and, speci cally, during the examination of the -          making board decisions, (ii) the information under-
nancial statements, when the results achieved are          lying the most important resolutions made by the
closely compared with the objectives stated in the         Board in 2009, (iii) the activity of the Committees
budget forecasts.                                          and (iv) the mechanisms used to inform and update
                                                           the Board of Directors.
The Board of Directors assesses the adequacy of               At its meetings on February 25th and March
the company’s organisational, administrative and           25th, 2010, the Board examined the results of the
accounting structure on the basis of the information       self-assessment.
provided by the management, and, in the speci c               A generally positive picture emerged. The qual-
case of the system of internal controls, also on the       ity of the members of the Board, the combination of
basis of the investigation carried out by the Internal     expertise they bring to their tasks, the constructive
Control and Corporate Governance Committee. In             climate of discussion that characterises its work
discharging its responsibilities as head of the inter-     and the effectiveness of the contribution made by
nal control system, the Board also has recourse to         the internal committees were all acknowledged. The
        the internal control body, which performs the      interest and willingness of Board members to inves-
        internal audit, that is, the associate company,    tigate business issues thoroughly, and to increase
        Telecom Italia Audit & Compliance Services;        the knowledge-base within the company deserve to
        the executive responsible for drawing up com-      be highlighted. Among the areas of improvement
        pany accounting documents with speci c refer-      recommended was the speedier dissemination of                 127

        ence to internal controls for nancial reporting.   information prior to meetings, in order to allow the       INTERNAL
                                                           items on the agenda to be examined in detail. The       STAKEHOLDERS
With regard to the annual board assessment, the            Board was once again urged to increase the number         shareholders
practice of self-assessment introduced in Telecom          of independent Directors.
Italia in 2005, was renewed for the fth successive
year.                                                      In 2009, seven meetings of the Board of Directors
   As part of the annual self-assessment proce-            were held. The Directors were sent the appropri-
dure, in 2009 the Board of Directors decided to ob-        ate documentation, within a timescale in line with
tain the assistance of a company (Spencer Stuart)          the particular circumstances, to enable them to
that specialises in preparing and executing such           participate in meetings in an informed way. When
self-assessments. In addition, speci c analyses            specialised topics were discussed during meetings,
were also conducted in order to identify ways in           the respective managers were invited to participate
which the operation of the Board could be improved.        by the Chairman, with the agreement of the other di-
   This was achieved through (i) structured, indi-         rectors. When appropriate, external consultants also
vidual interviews with Directors, based on the three       took part in order to provide the necessary technical
self-assessment criteria identi ed by the Self-Regu-       and professional support.
latory Code (size, composition, operation); (ii) analy-       The average duration of the meetings was
sis of the minutes of the meetings of the Board of         around four hours. The attendance percentage was
Directors and Committees to consider the matters           93.33 (97.14% for independent Directors).
discussed, the duration and the structure of the              Nine meetings are planned in 2010, three of
meetings; (iii) a comparison with best practice of the     which have already been held.
Boards of Directors of similar companies.
   Each board member was presented with state-             Delegated bodies
ments and given the opportunity either to state their      The power to delegate (and revoke) powers of at-
level of agreement or not to respond. Any comments         torney to Directors is reserved to the Board, which
made by interviewees on each of the issues dis-            de nes the purpose, limits and methods by which
                 such powers are exercised, and receives a continu-           The Committee’s task is to monitor the manage-
                 ous ow of information regarding the operations            ment performance of the Company and the Group,
                 carried out, on the general progress of management        to approve organisational macrostructures, on the
                 and on the most signi cant economic, nancial and          proposals of the executive Directors, to give opin-
                 asset operations.                                         ions to the Board of Directors on the budget and the
                                                                           strategic, industrial and nancial plans of the Com-
                 On April 15th, 2008, the Board of Directors appoint-      pany and Group, and to perform any tasks that may
                 ed Gabriele Galateri di Genola as Chairman and            be assigned by the Board of Directors, within the
                 Franco Bernabè as Managing Director.                      scope of matters that can be delegated.
                    In addition to the legal representation of Com-           The Committee periodically reports on the opera-
                 pany, the Chairman has been assigned the following        tions carried out to the Board in the most appropri-
                 responsibilities:                                         ate manner during the rst available meeting.
                       supervision of the drawing-up of strategic, in-
                       dustrial and nancial plans, their implementa-       In 2009, the Committee held four meetings, with an
                       tion and development;                               average duration of around three hours.
                       supervision of the de nition of the organisa-          The attendance percentage was 96% (100% for
                       tional structures;                                  independent Directors). Five meetings, of which
                       supervision of the economic and nancial             two have already been held, have been planned for
                       progress;                                           2010.
                       supervision of the process of examining and
                       establishing the guidelines for the internal con-   Other executive Directors
                       trol system.                                        There are no executive Directors on the Board of
      128                                                                  Directors other than the Chairman and Managing
   INTERNAL      In addition to the legal representation of the Com-       Director.
STAKEHOLDERS     pany and all the powers, exercised by individual

  shareholders   signature, required to carry out the various forms of     Independent Directors
                 corporate activity, with no exclusions, the Managing      Telecom Italia has embraced the criteria for assess-
                 Director has been given responsibility for the overall    ing the “independence” of its Directors established
                 management of the company and of the group, and           by the the Borsa Italiana’s Self-Regulatory Code.
                 in particular:                                            According to information provided by the Directors,
                       responsibility for de ning, proposing to the        Paolo Baratta, Roland Berger, Elio Cosimo Catania,
                       Board of Directors and subsequently imple-          Jean Paul Fitoussi and Luigi Zingales are con rmed
                       menting and developing, the strategic, indus-       as independent directors.
                       trial and nancial plans;                               At its meeting on February 25th, 2010, the
                       responsibility for de ning organisational struc-    Board of Directors veri ed that the aforementioned
                       tures;                                              directors meet the requirements of independence
                       all organisational responsibility for ensuring      under Art. 147-c, paragraph 4, of Legislative Decree
                       the proper management and development of            No. 58/1998, and also con rmed that the deter-
                       the business by coordinating organisational         mined that the requirements for the composition of
                       structures in any way that is not the responsi-     the administrative body as a whole (the presence
                       bility of the Chairman.                             of at least two independent Directors in accordance
                                                                           with the criteria laid down by law for Statutory Audi-
                 On April 15th, 2008, an Executive Committee was           tors) had been met.
                 also set up, consisting of executive directors (who          The Board of Statutory Auditors, as required by
                 ensure coordination with the group’s management)          the Company’s Self-Regulatory Code, monitored the
                 and non-executive directors. The Chairman of the          activities undertaken in order to verify ful lment of
                 Committee is the Chairman of the Board of Direc-          the requirements and the correct application of the
                 tors. For the current composition, refer to table 4,      independence criteria.
                 which is attached to the full text of the Report.
Lead Independent Director                               governed by the Company’s Self-Regulatory Code.
The Lead Independent Director is currently the Direc-
tor, Paolo Baratta, who is Chairman of the Internal     Appointments and remuneration committee
Control and Corporate Governance Committee, as          The Appointments and Remuneration Committee
well as a member of the Supervisory Board in ac-        consists of non-executive Directors, the majority of
cordance with Legislative Decree 231/2001.              whom are independent Directors, including at least
   The Lead Independent Director is the point of        one Director chosen from a minority list. Please re-
reference and coordination for the proposals and        fer to Table 4 (attached to the complete text of the
contributions of the independent directors. He has      Report) for its current composition.
the facility to use the company structure to carry         The Committee has advisory and consultative
out his duties and may convene special meetings         functions (i) on the remuneration of Directors hold-
for Independent Directors only (Independent Direc-      ing speci c of ces, to bring them into line with the
tors’ Executive Sessions) in order to discuss the       objective of creating value for shareholders over
functions of the Board of Directors or issues of the    time; (ii) on the periodic assessment of the criteria
management of the Company. Four meetings were           used to determine the remuneration of the Com-
held in 2009.                                           pany’s senior management and, on the instruction
   In accordance with the Self-Regulatory Code, the     of the Managing Directors, any stock option or share
Chairman of the Board of Directors collaborates with    assignment plans; (iii) on monitoring the implemen-
the Lead Independent Director in the proper opera-      tation of decisions taken and company policies on
tion of the administrative body (including selecting    remuneration for senior management and (iv) on
the matters to be discussed during meetings of the      proposals regarding candidates for the Board, in the
Board).                                                 event of the replacement of an independent director
                                                        during their term of of ce.                                     129

Treatment of company information                           In 2009, the Committee’s activities concerned             INTERNAL
Telecom Italian has appropriate procedures for clas-    the remuneration system for executive directors           STAKEHOLDERS
sifying and dealing with con dential information.       of the Company (the Chairman and the Managing               shareholders
   Furthermore, a procedure has been adopted for        Director) and the senior management, to bring the
the internal management and outside communica-          Company in line with best market practice. The Com-
tion of documents and information regarding the         mittee supervised initiatives of assessment and
Company, with particular reference to con dential       segmentation of senior management, drawing up re-
information. This procedure governs the handling of     placement tables for strategic managerial positions,
con dential information regarding Telecom Italia, its   and carrying out a detailed study of remuneration in
non-listed subsidiaries and the Group’s listed nan-     the form of nancial instruments for both manage-
cial instruments and applies to all members of the      ment and employees.
management bodies, as well as to employees and             At the request of the Board of Directors, the
external associates, who have access to matters         Committee also selected a candidate for the posi-
that may become privileged information. It instructs    tion of external member of the Company’s Supervi-
all subsidiary companies to provide, without delay,     sory Board, in accordance with Legislative Decree
any information required to comply with public dis-     No. 231/2001.
closure obligations.                                       As required by the Company’s Self-Regulatory
   Finally, this procedure also governs the register    Code, in order to carry out its duties the Committee
of those with access to con dential information (ar-    availed itself of the Company’s internal facilities and
ticles 152-b et seq. of the Issuers Regulations).       of external consultants of its own choosing.
                                                           In 2009, it held eleven meetings and minuted
Internal committees of the Board                        them as required. The contributions of managers
In addition to the aforementioned Executive Commit-     responsible for areas under discussion were sought.
tee, the Board also has an Appointments and Remu-       The average duration of the meetings was approxi-
neration committee and an Internal Control and Cor-     mately two hours and the meetings were attended
porate Governance Committee, whose functions are        by all the Committee members.
                    Three meetings have already been held in 2010.       (iii) for both, personal health coverage and insur-
                                                                         ance against work-related and non work-related acci-
                 Remuneration of Directors, Chief Executive Of c-        dents, life insurance and permanent disability insur-
                 ers and Key Managers with strategic responsibili-       ance due to illness; (iv) for both, a sum equal to the
                 ties                                                    amount required in order to pay taxes on this type of
                 The remuneration received by Directors, Chief Execu-    taxable bene ts.
                 tive Of cers and Key Managers in 2009 appears              An incentive plan is also provided for the Manag-
                 in Note 45 (Other information) to Telecom Italia        ing Director for the nancial year 2009 of between
                 S.p.A.’s nancial statements.                            50% and 200% of his xed salary, dependent on the
                                                                         attainment of speci c, certi able indicators, linked
                 At the meeting held on April 15th, 2008, the Board      to objectives in four target areas set as priorities for
                 of Directors distributed overall annual remunera-       the 2009-2011 business plan.
                 tion of 2.2 million euros, as approved by sharehold-          Value Creation, expressed by the Net Income
                 ers during the Shareholders’ Meeting of April 14th,           (weighting: 20%),
                 2008 for the three-year period 2008-2010, as fol-             Cash Improvement, assessed in terms of the
                 lows:                                                         ratio between Net Debt and EBITDA (weight-
                         remuneration of 110,000 euros for each Direc-         ing: 15%),
                         tor in of ce;                                         Quality, in terms of the Customer Satisfaction
                         additional remuneration of 35,000 euros for           Index (weighting: 15%),
                         each member of the Executive Committee;               Focus on the operational component, either
                         additional remuneration of 45,000 euros for           as the ratio between cash costs and revenues
                         each member of the Internal Control and Cor-          (weighting: 15%), or in terms of the revenue
      130                porate Governance Committee;                          from speci cally identi ed innovative services
   INTERNAL              additional remuneration of 20,000 euros for           (weighting: 15%).
STAKEHOLDERS             each member of the Appointments and Remu-

  shareholders           neration Committee;                             The objectives for the above parameters are set by
                         additional remuneration of 20,000 euros for     the 2009 budget target with decreases to a mini-
                         the Director appointed to the Supervisory       mum threshold value, and a maximum payout for the
                         Board pursuant to Legislative Decree No.        attainment of predetermined increases. Movements
                         231/2001.                                       are assessed according to the relevant indicators
                                                                         and intermediate performance results are measured
                 The non-executive Directors receive remuneration        in a linear manner. In addition to the quantitative
                 resulting from the distribution of the overall sum      parameters (with a total weighting of 80%) there are
                 established by the Shareholders’ Meeting on April       qualitative valuation criteria (weighting: 20%) at the
                 14th, 2008, as stated above. Their remuneration is      discretion of the Board of Directors.
                 not therefore linked to the Company’s nancial per-         Furthermore, the Chairman and Managing Direc-
                 formance. Non-executive directors are not permitted     tor (see the table in Note 45 “Other Information”
                 to participate in any share ownership schemes.          to the Telecom Italia S.p.A.’s nancial statements),
                                                                         are assigned stock options in accordance with the
                 The Board of Directors, on a proposal from the Ap-      plan approved at the meeting of April 14th, 2008, of
                 pointments and Remuneration Committee, and              3,000,000 for the Chairman and 8,400,000 for the
                 with the approval of the Board of Statutory Audi-       Managing Director, according to the conditions set
                 tors, established xed remuneration for executive        out in more detail in the public disclosure document,
                 Directors of 1,300,000 euros for the Chairman and       published in accordance with Art. 84-b of the Issu-
                 1,400,000 euros for the Managing Director, in addi-     ers Regulations.
                 tion to the aforementioned remuneration, as well as:       Provision has also been made for the Chairman
                 (i) for the Chairman, the use of a Company at; (ii)     and Managing Director to be paid the sums due
                 for the Managing Director, payments into a welfare      to them until expiry of their term of of ce, supple-
                 plan of an amount equal to 10% of his xed salary;       mented by a compensation amounting to one year’s
remuneration, should they leave of ce before the              governance structure since 2000, has the following
expiry of the mandate granted by the Sharehold-               advisory and consultative functions:
ers’ Meeting of April 14th, 2008 (i) due to objective              assisting the Board and, on request, the Man-
causes (such as a Company merger or the dismissal                  aging Director, in carrying out duties related to
of the entire Board in accordance with Art. 9.12 of                the internal control system in the Company;
the Bylaws, (ii) at the Company’s initiative (unless               assessing the work plan prepared by the inter-
there is just cause) or (iii) at the initiative of the par-        nal control manager, who submits a (quarterly)
ties concerned, if there is just cause (e.g.: changed              report to the Board;
circumstances, especially with regard to assigned                  assessing the proper observance of account-
functions, or a signi cant change to the relevant                  ing principles and their consistent applica-
shareholding). For the Managing Director, this in-                 tion within the Group for the preparation of
cludes a variable component, calculated as the aver-                 nancial statements, in collaboration with the
age of payments already received.                                  administrative managers of the Company and
                                                                   the executive in charge of drawing up the com-
At the meeting held on February 25th, 2010, the                    pany’s accounts in consultation with the statu-
Board of Directors took note of the new Executives                 tory auditors;
with strategic responsibilities (otherwise known as                assessing the work plan for the audit, and the
executive of cers or key managers) resulting from                  results presented in the report or any letter of
the latest reorganisation, in late 2009. They current-             suggestions;
ly hold the positions of pro tempore Chief Financial               periodically reporting to the Board on its activi-
Of ce, Domestic Market Operations Manager, Tech-                   ties, in the rst available meeting, and on the
nology & Operations Manager, Diretor Presidente of                 adequacy of the internal control system at the
Tim Brasil, Human Resources and Organization Man-                  time the budget and the half-yearly report are             131

ager, Corporate Legal Affairs Manager, and Purchas-                approved.                                               INTERNAL
ing Manager. In addition, they include the Chairman                                                                     STAKEHOLDERS
of the Board of Directors and the Managing Director.          The Committee also:                                         shareholders
   Total remuneration paid in 2009 to pro tempore                  veri es the effectiveness of the auditing pro-
executive of cers recognised as having strategic du-               cedures, compliance with the principles gov-
ties is shown, overall, in Note 45 (Other Information)             erning transactions with related parties (with
to Telecom Italia S.p.A.’s nancial statements.                     subsequent general monitoring and advance
   Remuneration to executive of cers with strategic                reviews of certain “prominent” transactions),
duties consists of a short-term variable component                 compliance and regular updating of corporate
linked to the Company’s nancial performance and/or                 governance rules.
attainment of speci c objectives, in the form of what              expresses its opinion on the appointment,
is known as the MBO. A free allocation (known as                   dismissal and assignment of functions to the
“Performance Share Granting”) is also given to this                internal control manager and the executive
group, and senior managers, consisting of a prede-                 responsible for drawing up the company’s ac-
termined maximum number of ordinary shares, which                  counts;
depends on the effective period of participation in                establishes the timetable and procedures for
the 2008-2011 Incentive Plan and the extent of the                 the board performance evaluation;
attainment of the predetermined share-performance                  performs other duties occasionally assigned
objectives, expressed as absolute and relative Total               by the Board of Directors.
Shareholder Return. The plan’s information document
is available on the Company’s website.                        The Committee examined the quarterly reports pre-
                                                              pared by the internal control manager on auditing
Internal control and corporate governance com-                activities, on the implementation of plans to improve
mittee                                                        the internal control system and the implementation
The Internal Control and Corporate Governance                 of follow-up activities, on the work done to monitor
Committee, which has been part of the Company’s               and verify the compliance of company procedures
                 and operations with speci c legal provisions and in-     Internal control system
                 ternal procedures, and on the management of risks        The internal control system is a process made up of
                 and IT compliance. Speci cally, the Committee care-      organisational rules, procedures and structures de-
                 fully supervised standards of compliance in market-      signed to ensure the values of procedural fairness,
                 ing and with requirements regarding privacy and          transparency and accountability that are considered
                 the treatment of data of traf c and related parties,     fundamental to the business activities of Telecom
                 carrying out a detailed investigation into the sale of   Italia, laid down by the Group’s Code of Ethics and
                 the shareholding in Hansenet to the majority share-      the Company’s Self-Regulatory Code. The proc-
                 holder of Telco, Telefónica. Finally, the Committee      ess, which is under constant monitoring in order to
                 monitored the status of the stake held by Telecom        ensure steady improvement, is designed to ensure
                 Italia in Sofora (the holding company of Telecom Ar-     management ef ciency, transparency and veri abil-
                 gentina).                                                ity, the reliability of accounting and management
                    In other elds, it also closely monitored the work     data, compliance with applicable laws and regula-
                 carried out to maintain and update what is known as      tions, protection of the assets of the company and
                 Organisational Model 231 (see below), and received       the prevention of fraud perpetrated to the detriment
                 updates concerning corporate social responsibility       of the Company and the nancial markets.
                 issues on the initiatives implemented last year by          As the body responsible for the internal control
                 the Telecom Italia Foundation and Group companies,       system, the Board of Directors establishes its objec-
                 as well as on the plans for 2010.                        tives and veri es its adequacy, effectiveness and
                    With regard to auditing, nally, the Committee         correct operation to ensure that the main risks to
                 held several technical meetings on the subject of        the company (operational, economic, nancial and
                 the impairment test of goodwill, supporting both         compliance-related) are correctly identi ed and man-
      132        the approach adopted by the Company and its nal          aged over time.
   INTERNAL      conclusions.
STAKEHOLDERS        The Board of Directors was periodically informed      With regard to nancial risks, in the course of its

  shareholders   of each of the above activities.                         business activities, Gruppo Telecom Italia is ex-
                                                                          posed to the following:
                 For details of the members of the Committee (all          a. market risk: resulting from uctuations in inter-
                 of whom are non-executive directors, most of them             est and exchange rates relating to nancial
                 independent, with at least one from a minority list),         activities undertaken and nancial liabilities
                 please refer to Table 4, attached to the full text of         underwritten;
                 the Report. All members have appropriate account-         b. credit risk: the risk of the failure of a counter-
                 ing and nancial experience.                                   part to ful l obligations counterpart regarding
                    In 2009, the Committee held twelve meetings,               the liquidity requirements;
                 regularly minuted, with by expert input from Com-         c. liquidity risk: connected to the need to meet
                 pany management and subjects outside the Board.               short-term nancial commitments.
                 The average duration of the meetings was approxi-
                 mately two hours and fty minutes and the attend-         These risks are managed by laying down guidelines
                 ance rate was 85.42%. In some cases, because of          to be followed by operational management, by the
                 the matters to be discussed, the Board of Statutory      work of an internal committee that monitors the lev-
                 Auditors also held joint meetings with the Internal      els of risk exposure in line with established goals,
                 Control and Corporate Governance Committee. The          and by the monitoring of the results achieved. Spe-
                 Board of Statutory Auditors was also represented         ci cally, the management policies cover:
                 at all the Committee’s meetings in the person of          a. for the market risk: complete coverage of the
                 its Chairman (or at least one Statutory Auditor ap-           exchange rate risk and minimal exposure to
                 pointed by him).                                              interest rates through the appropriate diversi-
                    At least six meetings are planned for 2010, of               cation of portfolios, which also includes the
                 which three have already been held.                           use of nancial derivative instruments.
                                                                           b. for the credit risk: liquidity is prudently man-
      aged and is mainly divided between “money           to propose corrective measures should anomalies
      market management” (investment of tempo-            or malfunctions be encountered.
      rary cash surpluses) and “bond portfolio man-          Telecom Italia Audit & Compliance Services:
      agement” (investment of a level of permanent              reports on its operations to the Director ap-
      liquidity). In both types of management, in               pointed for this purpose, to the Internal Con-
      order to reduce the risk of failure by a counter-         trol and Corporate Governance Committee
      part to ful l obligations, counterparts and issu-         and, through it, to the Board of Directors, as
      ers with a high credit rating are selected under          well as to the Board of Statutory Auditors;
      a careful diversi cation policy for the purposes          also carries out checks at the request of the
      of liquidity and the distribution of credit posi-         executive responsible for drawing up the Com-
      tions between various banking counterparts;               pany’s accounting documents;
 c. for the liquidity risk: the objective is to achieve         ensures compliance with the principles and
      an adequate level of nancial exibility by                 values expressed in the Code of Ethics, in-
      maintaining an adequate treasury margin that              vestigating reports made by employees and
      enables coverage of re- nancing requirements              third parties regarding violations and irregulari-
      for at least the following twelve months.                 ties (including accounting irregularities) and
                                                                promoting the most appropriate action to be
Executive Director in charge of the internal control            taken, including penalties.
The Board of Directors has selected its Chairman          In the 2009 nancial year, a total of 241 operations
as the Director in charge of supervising the opera-       were conducted by the internal control manager
tion of the internal control system. He is therefore      covering the organisational areas of the Group in ac-
required to de ne the instruments and procedures          cordance with the established plan, with an increase             133

that make up the system, ensuring it is adapted to        in activity to deal with the situations that arose dur-       INTERNAL
accommodate any operational, legislative and regu-        ing the course of the year, above all in the Technolo-     STAKEHOLDERS
latory changes. The Executive Directors ensure the        gy & Operations eld. In 2009, 97 noti cations were           shareholders
overall adequacy and operation of the system, each        received, 31 of which concerned company matters
within his own area of responsibility, in collaboration   (mainly regarding the security of exchanges, rela-
with the executive responsible for drawing up the         tions with suppliers, vehicle management, product
company’s accounting documents and the internal           marketing fraud, the sale of products to unreliable
control supervisor for those matters under his re-        customers and the alleged pursuit of personal inter-
sponsibility, using the established instruments and       est by employees in the conduct of their working
procedures. This is carried out under a risk-based        activities) and, where necessary, corrective actions
perspective, which is also essential in establishing      were taken (or are currently being implemented) by
the agenda for the work of the Board of Directors.        the appropriate bodies.
                                                             The corrective actions required to eliminate weak
Internal control manager                                  points have been undertaken, speci c follow-ups
In exercising its responsibility for the internal con-    have been carried out in accordance with pre-estab-
trol system, the Board is supported by the Internal       lished, objective criteria, and monitoring is underway
Control and Corporate Governance Committee and            of the actions taken in particularly sensitive areas.
a responsible body (as mentioned in previous gov-            Throughout 2009, the associate company, TI Au-
ernance Reports, this is the associate company Tel-       dit & Compliance Services, supervised the internal
ecom Italia Audit & Compliance Services) This latter      control system of the Telecom Italia Group, in line
is granted the level of independence and means in         with its Corporate Governance objectives, through
order to carry out its duties, which include direct and   the following departments: Audit, Compliance, IT
independent access to any information it requires.        Risk & Security Governance and the subsidiary TIAu-
The responsible body must support the manage-             dit Latam, ensuring effective overall supervision.
ment and control structures in checking the adequa-          This allowed an assessment to be made of the
cy and effective operation of the control system, and     internal control system to establish its capacity –
                 in terms of adequacy, functionality and reasonable         sible. This Organisational Model consists of:
                 certainty – to contribute to the attainment of the               the Code of Ethics of the Telecom Italia Group,
                 objectives of the individual company structures (ef-             which lays down the general principles (trans-
                 fectiveness), assessing the use of the resources                 parency, propriety, legality) which the Company
                 for implementing them (ef ciency) in the light of the            pursues in the conduct of its business;
                 (qualitative/quantitative) risk factors and the poten-           the “general internal control principles”, de-
                 tial in uence of these risks on the attainment of the            signed to ensure the attainment of operational
                 objectives.                                                      effectiveness and ef ciency, the reliability of
                    The development of the internal control system                the nancial and management information,
                 is evaluated by TI Audit & Compliance Services in                respect for the laws and regulations and pro-
                 accordance with the Telecom Italia’s Self-Regulatory             tection of the company’s assets, especially
                 Code and the Borsa Italiana’s Self-Regulatory Code               against potential fraud;
                 under the main Corporate Governance aspects of                   the “principles of conduct”, speci c rules gov-
                 listed companies: business ethics, regulatory frame-             erning relations with government bodies, in-
                 work of reference, procedural framework, corporate               cluding corporate obligations and operations
                 culture, organisational aspects, information and                 the “internal control charts”, which outline
                 communication and company processes that guar-                   company processes exposed to the risk of
                 antee operational effectiveness and ef ciency.                   criminality, the offences that may be commit-
                    In its overall evaluation of the internal control             ted and the preventative measures intended to
                 system, TI Audit & Compliance Services applied the               avoid this.
                 following elements of the CoSo Report methodol-
                 ogy (Control Model drawn up by the Committee of            The internal control charts have been drawn up un-
      134        Sponsoring Organisations (CoSO) of the Treadway            der the following basic principles: (i) separation of
   INTERNAL      Commission): (i) Control environment and (ii) Infor-       roles in carrying out the many company activities; (ii)
STAKEHOLDERS     mation and Communication, which attribute consid-          traceability of decisions, enabling the identi cation

  shareholders   erable importance to overseeing audit and compli-          of responsibility and justi cation; (iii) bringing objec-
                 ance methods, disseminating a control culture and          tivity to the decision-making processes to free deci-
                 consolidating the ethical values of the company; (iii)     sions from subjective assessment and ensure their
                 Evaluation of the risks and (iv) Control activities that   foundation on the principles laid down.
                 impose a selection and management process on                  The Organisational Model is a dynamic instru-
                 the audit in addition to the supervision of compli-        ment which must itself be constantly checked and
                 ance with the current legal requirements and key           updated based on the supervision of the process
                 internal procedures; (v) Monitoring, in order to su-       and developments in regulations. As a result, vari-
                 pervise the audit and compliance in areas of great-        ous updates were made to the Model during 2009.
                 est risk, designed to ensure the effective handling        These were drawn up by a management commit-
                 of weak points.                                            tee, known as the 231 Steering Committee (made
                    Therefore, due to the corrective actions under-         up of the General Counsel, the Human Resources
                 taken in the speci c operational contexts analysed,        & Organization Department Manager, the Chairman
                 the internal control system overall is deemed to           of Telecom Italia Audit & Compliance Services and
                 have reduced the risk pro les to an acceptable             the Group Compliance Of cer), with the support of
                 level.                                                     external consultants, and overseen by the Supervi-
                                                                            sory Body. Where major supplements to the Model
                 The Organisational model under Legislative Decree          were required, these were submitted for approval by
                 231/2001                                                   the Board.
                 The internal control system is completed by what is           The Supervisory Body oversees the operation of
                 known as the “Organisational Model 231”, adopted           and compliance with the 231 Organisational Model
                 in accordance with Legislative Decree 231/2001,            and consists of a member of the Board of Statutory
                 which is designed to prevent the commission of any         Auditors (the Board’s Chairman, Ferdinando Superti
                 crimes for which the Company could be held respon-         Furga), an independent Director who is a member of
the Internal Control and Corporate Governance Com-       vision of the Board of Statutory Auditors with the
mittee (Paolo Baratta) and the internal control man-     support of company departments. The bids received
ager, that is, the Chairman of Telecom Italia Audit &    from various auditors were examined with particular
Compliance Services (Federico Maurizio d’Andrea).        reference (i) to the expertise and the speci c experi-
The Body, which was reappointed on April 15th,           ence of auditing in the telecommunications sector;
2008, following the renewal of the Board of Direc-       (ii) to the adequacy of the technical structure for the
tors and for the same period of of ce, reports to the    size and complexity of the Company and the Group
Board, the Internal Control and Corporate Govern-        to which it reports; (iii) to experience with adherents
ance Committee, and the Board of Statutory Audi-         to the Italian SEC register; (iv) to independence and
tors on the controls and their outcome.                  autonomy of judgement with regard to the Company
   At the meeting of September 24th, 2009, with          and the Group; (v) to the correspondence of the
the approval of the Internal Control and Corporate       fees charged with the schedule and professionalism
Governance Committee and the Board of Statutory          required.
Auditors, the Board of Directors decided to appoint         Telecom Italia has adopted suitable Guidelines
an external member to the Supervisory Body, later        for applications by audit companies: (i) for the com-
identi ed as Professor Vincenzo Sala a on the pro-       missioning of the audit of the nancial statements
posal of the Appointments and Remuneration Com-          of Telecom Italia S.p.A. (Telecom Italia, the Company
mittee.                                                  or the Parent Company); (ii) for the commission-
   In order to provide support to the Supervisory        ing of the audit of the nancial statements/report-
Bodies of Group Companies, a dedicated structure         ing packages of the subsidiaries of Telecom Italia;
(Compliance 231) was set up within Telecom Italia        (iii) for the commissioning by the Company and its
Audit & Compliance Services to handle reports of         subsidiaries of further undertakings for the company
breaches of the Organisational Model and conduct         commissioned to audit the nancial statements of                 135

speci c compliance audits based on the information       the Parent Company and the bodies belonging to its           INTERNAL
streams set up within the Group.                         network, as de ned in the applicable regulations.         STAKEHOLDERS
                                                            Without prejudice to compliance with the ap-             shareholders
Auditing company                                         plicable regulations, the commission to audit the
The audit of the separate nancial statements of          separate nancial statements, the consolidated
Telecom Italia S.p.A. and the consolidated nancial        nancial statements, the annual report published
statements of the Telecom Italia Group, the limited      in accordance with the reporting requirements with
mid-year audit of the condensed consolidated nan-        which Telecom Italia is required to comply because
cial statements of Telecom Italia S.p.A., and the        it is registered with the United States Securities and
audit of the annual report drawn up according to the     Exchange Commission, and the half-year nancial re-
US Securities Laws are carried out by Reconta Ernst      port of Telecom Italia in line with these Guidelines is
& Young S.p.A., initially appointed by the Sharehold-    awarded by the Shareholders’ Meeting on the basis
ers’ Meeting of June 12th, 2001. The appointment         of the considered proposal of the Board of Statutory
was renewed by the Shareholders’ Meeting of May          Auditors.
6th, 2004 and extended by the Shareholders’ Meet-           The preliminary inquiries for the commission (or
ing of April 16th, 2007, in accordance with article 8,   later amendments) to audit the nancial statements
paragraph 7, of Legislative Decree No. 303 of De-        of Telecom Italia is co-ordinated by the executive
cember 29th, 2006, for a further three years, and,       responsible for drawing up the Company’s account-
therefore, expiring with the 2009 nancial state-         ancy documents, under the supervision of the Board
ments. The Shareholders’ Meeting convoked to ap-         of Statutory Auditors, who may be assisted by the in-
prove the nancial statement with then make provi-        ternal control manager in verifying the independence
sion for the auditing of accounts for the period 2010    of the candidate auditor, according to the applicable
– 2018, on the basis of the considered proposal of       regulations.
the Board of Statutory Auditors.                            The Commissioned Auditor is the principal audi-
   The auditing company was selected following a         tor of the entire Telecom Italia Group. The com-
comparative analysis conducted under the super-          missioning of auditing or associated commissions
                 (audit services and audit-related services) of bodies      a nancial nature, the Regulation grants him opera-
                 other than the Commissioned Auditor, and/or bodies         tional responsibility (for organisation and individual
                 belonging to its network, must be checked before-          matters) for the internal nancial reporting controls,
                 hand with the executive responsible for drawing up         with the proviso that he is supported by the execu-
                 the Parent Company’s accountancy documents, who            tive Directors and the management of the Company.
                 will initiate the necessary approval and reporting               The Executive reports to the Board of Directors,
                 processes, ensuring compliance with the applicable         to the Internal Control and Corporate Governance
                 regulations.                                               Committee and – within the limits of its responsibili-
                    To ensure the independence of the Commis-               ties – to the Board of Statutory Auditors.
                 sioned Auditor, the Guidelines lay down the principle
                 by which additional commissions to the Commis-             Risk management and internal audit systems re-
                 sioned Auditor and the bodies belonging to its net-        garding the nancial disclosure procedure.
                 work are limited to the services and activities strictly   With regard to risk management and internal audit
                 connected to auditing the nancial statements.              systems for the nancial control disclosure proce-
                 However, further commissions (allowed by the rel-          dures, Telecom Italia makes clear it is aware that
                 evant legislation) to the Commissioned Auditor and          nancial disclosure plays a central role in estab-
                 to the bodies belonging to its network, remain sub-        lishing and maintaining good relations between the
                 ject to the prior favourable opinion of the Board of       Company and its stakeholders by improving compa-
                 Statutory Auditors of the Parent Company. In urgent        ny performance and at the same time creating value
                 cases, the prior favourable opinion can be issued by       for its shareholders.
                 the Chairman of the Board of Statutory Auditors (or              The internal audit system for Financial Report-
                 another Statutory Auditor appointed by the latter),        ing is designed to ensure the trustworthiness(3),
      136        who will refer it for rati cation to the plenum of the     accuracy(4), reliability(5) and timeliness(6) of its nan-
   INTERNAL      control body in the rst subsequent meeting.                cial disclosures. In this context, Telecom Italia has
STAKEHOLDERS                                                                established, and continuously updates, a regula-

  shareholders   Executive responsible for drawing up the compa-            tory/documentary system of the Group’s accounting
                 ny’s accountancy documents                                 standards, administrative accountancy procedures,
                 The position of Executive responsible for drawing up       guidelines, operating instructions, accountancy
                 the company’s accountancy documents was held,              manuals and charts, in order to guarantee ef cient
                 until December 2nd, 2009, by Marco Patuano. At a           coordination and exchange of information between
                 meeting on that date, following the reorganisation of      the parent company and its subsidiaries, and the
                 certain senior management positions, the Board of          correct preparation of the separate nancial state-
                 Directors appointed the new Administration, Finance        ments and consolidated nancial statements.
                 and Control Department Manager, Andrea Mangoni,                  In particular, Telecom Italia has introduced:
                 as the Executive responsible for drawing up the                    a document containing the Group’s account-
                 company’s accountancy documents.                                   ancy standards drawn up on the basis of IAS/
                    According to the Bylaws (article 13), the Board                 IFRS (International Accounting Standards /
                 of Directors makes the appointment, subject to the                 International Financial Reporting Standards) to
                 opinion of the Board of Statutory Auditors and – un-               be adopted by all Group companies, with quar-
                 der the terms of the Self-Regulatory Code (see the                 terly updates, to ensure uniformity throughout
                 appropriate Code, article 14) – the Internal Control
                 and Corporate Governance Committee, which de ne            (3) Trustworthiness (of the information): the information is correct
                                                                                and conforms with the generally accepted accounting principles
                 the powers and responsibilities at an internal level.          and meets the requirements laid down by the applicable laws and
                 These are governed by the appropriate Regulation,          (4) Accuracy (of the information): the information is neutral and
                                                                                precise. The information is considered neutral if it is free from
                 available at the Company’s website. Given that                 preconceived distortions likely to in uence the decision-making
                                                                                process of others in order to obtain a predetermined result.
                 he is responsible by law for establishing appropri-        (5) Reliability (of the information): the information is clear and com-
                                                                                plete to permit informed investment decisions. The information
                 ate administrative and accounting procedures for               is considered clear if it enables the understanding of complex
                                                                                aspects of the company situation, without however being exces-
                 drawing up the statutory and consolidated nancial              sive or super uous.
                                                                            (6) Timeliness (of the information): the information meets the dead-
                 statements, as well as any other communication of              lines laid down.
     the Group of items in the nancial statements,            The system for managing risks and internal au-
     and the respective accountancy standards           dits in Telecom Italia’s Financial Reporting is struc-
     which are essential to comply with the princi-     tured as follows:
     ple of “truthful and accurate representation” in           risk(7) identi cation in nancial reports: at this
     the Gruppo Telecom Italia consolidated nan-                stage, Telecom Italia de nes the identi cation
     cial statement;                                            criteria for the “relevant” entities and process-
     a chart of accounts for the Group to ensure a              es in terms of their potential impact on nan-
     uniform method of codifying and assigning the              cial reporting (the information contained in the
     management accountancy items common to                     draft balance sheet and in the notes to the ac-
     every company in the Group.                                counts), and risks ensuing from the failure to
     procedures for the preparation of monthly                  achieve audit objectives(8). These are related
     balance sheets, the separate nancial state-                to the possible risks of both unintentional er-
     ments and the consolidated nancial state-                  rors(9) and fraud(10), insofar as they may signi -
     ments for the Group. Speci cally, these                    cantly affect nancial reporting. Risks resulting
     procedures de ne the roles and responsibili-               from a failure to achieve audit objectives are
     ties of the bodies/departments involved, the               de ned in accordance with the COSO frame-
     information systems used, the stages of the                work and apply to both the Company/Group(11)
     processes and their deadlines, in addition to a            (“entity level”) and to the “process level(12)”;
     detailed working calendar;                                 selection of controls matched to identi ed
     procedures that lay down the administrative                risks: at this stage Telecom Italia uses an ap-
     and procedural rules which Group companies                 plication hosted on the company’s intranet(13)
     must follow in the administration of intercom-             to identify and document audits carried out
     pany relations to ensure timely notice is given            in-house which can mitigate the nancial re-                                137

     to companies of entries and their correct                  porting risks at the entity level         (14)
                                                                                                              , the process             INTERNAL
     representation in the individual nancial state-            level(15) and the IT General Controls(16);                           STAKEHOLDERS
     ments, and also to ensure they are properly                                                                                       shareholders
     merged when preparing the consolidated nan-        (7)  Risk: potential event which could compromise the attainment of
                                                             the objectives connected with the control system for nancial re-
     cial statement;                                         porting (the System), that is, accuracy, reliability, trustworthiness
                                                             and timeliness of the nancial information.
     an organic, detailed set of guidelines, pro-       (8) Control objective: all the stated objectives of the internal control
                                                             system of company information required to ensure a true and cor-
     cedures and operational instructions cover-             rect representation of the Financial Reporting. These objectives
                                                             consist of “balance-sheet assertions” (existence and occurrence,
     ing management procedures (revenue, costs,              completeness, rights and obligations, assessment and recording,
                                                             presentation and information) and “other control objectives” such
     investments and other assets) which regulate            as “respect for the authorised limits, separation of incompatible
                                                             duties, checks on the physical security and existence of goods,
     in detail:                                              documentation and traceability of the operations, etc.).
                                                        (9) Error: in the context of the System, any unintentional act or omis-
      -   the responsibilities of the company depart-        sion that results in a misleading declaration in the information.
                                                        (10) Fraud: in the context of the System, any intentional act or omis-
          ments involved in administrative proc-             sion that results in a misleading declaration in the information.
                                                        (11) Analysis at company/group level, the so-called “entity level”: in
          esses;                                             this context the analysis (identi cation of the risks, evaluation of
                                                             the risks, identi cation of the controls, etc.) is conducted at com-
      -   accounting procedures, accounting princi-          pany/group level, and is structured according to the components
                                                             of the COSO model. The elements to be analysed include, for
          ples and assessment of the entries in the          example, the expertise of the personnel, the system of corporate
                                                             governance, the company regulatory system, the communication
           nancial statements in compliance with             of the responsibilities in terms of the internal control system and
                                                             the procedures for conducting risk assessment.
          the Group’s aforementioned accounting         (12) Analysis at the level of process, the so-called “process level”: in
                                                             this context the analysis (identi cation of the risks, evaluation
          principles.                                        of the risks, identi cation of the controls, etc.) is conducted at
      -   internal controls for the various stages of        individual process level, identifying the speci c process risks and
                                                             the relative speci c controls and monitoring.
          processes.                                    (13) So-called SOX Accelerator: branch structured database according
                                                             to the COSO model (structured for each Business Unit/company
                                                             included in the perimeter as processes, control objectives,
                                                             individual controls) that, for the pro led users, provides for the
Ensuring compliance with Italian regulations (Law            management of the documents by means of work ow.
                                                        (14) These are the controls de ned at company/group level, which
262/2005) and American legislation (Section 404              have a pervasive impact on the effectiveness of the controls
                                                             de ned at the process, transaction or application level.
of the Sarbanes Oxley Act), Telecom Italia operates     (15) These are the controls governing the company processes; they
                                                             are conducted manually and/or by means of IT applications imple-
a model of detection and monitoring of nancial re-           menting or supporting them.
                                                        (16) These are the controls included in the IT services delivered (such
porting, based on the COSO framework.                        as telecommunications, networks, technological infrastructure
                        evaluation of controls matched to identi ed                         able on the Company’s website.
                        risks: periodically during the year, according
                        to a calendar de ned in accordance with the                         Directors’ interests and transactions with related
                        certi cation requirements of Italian regula-                        parties
                        tions (Law 262/05) and American legislation                         Operations conducted by the Group companies are
                        (Section 404 of the United States Sarbanes                          in accordance with principles of propriety and trans-
                        Oxley Act) law, previously identi ed controls                       parency. To that end, operations with related parties,
                        are assessed in terms of “design”               (17)
                                                                               and          including operations within the Group, comply with
                        “operativity”(18) using speci c testing methods.                    essential procedural criteria for propriety in accord-
                        The evaluation of the controls is the primary                       ance with laid down principles of conduct, duly re-
                        responsibility of the competent management,                         ported to the market.
                        supplemented by an independent evaluation                              As of March 2008, the Board of Directors has
                        conducted by the management at Telecom Ita-                         replaced the previous procedure for managing trans-
                        lia Audit & Compliance Services S.c.a.r.l.                          actions with related parties, adopting more multifac-
                                                                                            eted regulations on these matters, which divide the
                 The results of the evaluation process described                            roles and decision-making responsibilities accord-
                 above (speci cally, any audit failures deemed to be                        ing to the type of activity. The current procedure,
                 signi cant/material in terms of the potential impact                       entitled Principles of Conduct for Transactions with
                 of the error/fraud on nancial reporting) are periodi-                      Related Parties, updated in June, 2008, is available
                 cally submitted to the Internal Audit and Corporate                        on the Company’s website.
                 Governance Committee and to the Board of Statu-                               A distinction has therefore been made between
                 tory Auditors. The presence of any de ciency acti-                         transactions falling within the ordinary course of
      138        vates a process that de nes, schedules and imple-                          business, which may or may not require the activa-
   INTERNAL      ments a speci c plan to remedy the aforementioned                          tion of an authorisation process based on proce-
STAKEHOLDERS     de ciency.                                                                 dures for determining the conditions of the relation-

  shareholders                                                                              ship with the related party, distinguishing between
                 Internal audit system – focus on Telecom Italia                            unidirectional xed situations and competitive proce-
                 Sparkle                                                                    dures (where the risk of con ict of interest is inher-
                 On February 23rd, 2010, a court order (the “Or-                            ently ruled out) and situations that are comparable
                 der”) was served on the subsidiary, Telecom Italia                         with market conditions (“at arm’s length”). The ma-
                 Sparkle, in connection with an ongoing investigation                       trix for checks and approval (in addition to the usual
                 regarding Telecom Italia Sparkle and several indi-                         internal authorisation procedures) is based on the
                 viduals, including certain employees, former employ-                       importance of the transaction, in terms of duration
                 ees and former directors of Telecom Italia Sparkle,                        and economic value, and is sometimes entrusted
                 regarding, inter alia, alleged cross-border conspiracy,                    to the management, sometimes to a Management
                 tax evasion and international money laundering. For                        Committee (Group Compliance Of cer, Chief Finan-
                 a complete description of the matter please refer to                       cial Of cer, General Counsel, supported by the rst
                 the full text of the Report and to Note 3 (“Restate-                       level manager, responsible for the speci c trans-
                 ment for errors and changes in accounting policies”)                       action) and sometimes to the Internal Control and
                 and 29 (“Contingent liabilities, other information,                        Corporate Governance Committee. It may progress
                 commitments and guarantees”) in the consolidated                           from one level to the next and require follow-up gen-
                  nancial statements at December 31st, 2009, avail-                         eral monitoring by the Internal Control and Corporate
                                                                                            Governance Committee.
                      and logical security), implemented by the company or by outside          In order to ensure the correct application of the
                      service providers. This set of controls is essentially independent
                      of the speci c systems/applications developed and/or imple-           Principles of conduct, an computer programme leaf-
                 (17) Evaluation of the “design”: consists of the analysis of the           let is available that enables the relationship and
                      adequacy of the design of the control, namely that the risk of not
                      attaining the objectives is reduced to an acceptable level.           required authorisation to be ascertained. The pro-
                 (18) Evaluation of the “operation”: intended to ascertain that the
                      controls, aimed at reducing identi ed risks to an acceptable level,   gramme also ensures the traceability of initiatives
                      are applied in the period under consideration in line with what is
                      set out in the “design”.                                              with related parties.
   A gap analysis is underway to ascertain if there       the majority list or the minority lists will take their
is any need to align the current internal procedures      place in order of age. Should any statutory auditor
with the new regulations issued by CONSOB resolu-         drawn from the Minority Lists leave of ce, the re-
tion 17221 of March 12th, 2010, which will enter          quirement of minority representation is met by draw-
into force on October 1st, 2010 (regime of transpar-      ing a substitute auditor from the Minority Lists.
ency) and January 1st, 2011 (new procedures for
decision making).                                         Statutory auditors
                                                          The Shareholders’ Meeting of April 8th, 2009 ap-
Appointment of statutory auditors                         pointed the current Board of Statutory Auditors,
The Board of Statutory Auditors consists of ve            whose mandate will end with the approval of the
statutory auditors. The Shareholders’ Meeting also         nancial statements in 2011, and also appointed its
appoints four substitute auditors.                        chairman and set the level of his remuneration.
   The Board of Auditors is appointed in accord-             Three lists were submitted, in accordance with
ance with the relevant legal and regulatory require-      the procedures and time limits laid down by the ap-
ments, on the basis of lists submitted (lodged at the     plicable regulations (Telco List, Findim Group List
registered of ce of the company at least fteen days       and Funds List); for information concerning candi-
before the date set by the rst convocation of the         dates included in the Lists, the shareholders who
Shareholders’ Meeting, unless there is a postpone-        submitted the Lists and the preferences of each
ment in the cases laid down by the applicable regu-       List, please refer to the full text of the Report.
lations) by shareholders who individually or together        Three Regular Statutory Auditors and three Alter-
with others hold shares representing at least 0.5%        nate Statutory Auditors were drawn from the Telco
of the capital with voting rights.                        list which obtained the majority of the votes cast,
    The lists are divided into two sections: one for      according to the order in which they were listed:               139

candidates to the of ce of regular statutory auditor      Salvatore Spiniello – Statutory Auditor, Ferdinando          INTERNAL
and the other for candidates to the of ce of substi-      Superti Furga – Statutory Auditor, Gianluca Ponzellini    STAKEHOLDERS
tute auditor. Three regular statutory auditors and        – Statutory Auditor, Ugo Rock – Substitute Auditor          shareholders
two substitute auditors are drawn from the list that      and Vittorio Mariani – Substitute Auditor.
obtained the majority of votes (“Majority List”), while      Two Statutory Auditors and two Substitute Audi-
the remaining regular statutory and substitute audi-      tors were drawn from the other lists: Enrico Maria
tors are drawn from the other lists (“Minority Lists”),   Bignami – Statutory Auditor (from the Savings Man-
subject to compliance with the laws and regulations       agement Companies List), Lorenzo Pozza – Statutory
regarding restrictions on matches with the Majority       Auditor (from the Findim Group List), Maurizio Lauri
List. To this end, the votes obtained by the Minority     – Substitute Auditor (from the Savings Management
Lists are divided into one and two and the shares         Companies List) and Silvano Corbella – Substitute
are assigned to candidates in both sections accord-       Auditor (from the Findim Group List).
ing to the order listed. The shares thereby allocated        The curricula vitae giving the personal back-
to the candidates on the various lists in descending      ground and professional quali cations of the Audi-
rank for appointment to the of ce of regular auditor,     tors are available for consultation at the Company’s
and descending rank for appointment to the of ce          website.
of substitute auditor, and those with the two high-          In accordance with the law, the Shareholders’
est shares are elected. If more than one candidate        Meeting also appointed the Chairman of the Board
obtains the same share, the candidate from the list       of Statutory Auditors, who was selected from the
that has not yet elected a statutory auditor is elect-    two Statutory Auditors elected by the minority, that
ed or, failing that, a new ballot is held at the Share-   is, Enrico Maria Bignami (the majority can be found
holders’ Meeting and the candidate who obtains a          in the full text of the Report).The proposal of the
simple majority of the votes is elected.                  Telco Shareholder to set the gross annual remunera-
    Should any of the statutory auditors chosen           tion for each of the Statutory Auditors at 80,000
from the majority list or from one of the minority        euros, the gross annual remuneration for the Chair-
lists leave of ce, the substitute auditors drawn from     man of the Board of Statutory Auditors at 120,000
                 euros, and the additional gross annual remuneration      ing bondholders), is provided in an ad hoc section at
                 for any Statutory Auditor called to join the supervi-    the Company’s website.
                 sory body at 15,000 euros was approved (the major-
                 ity can be found in the full text of the Report). At a   Shareholders’ meetings
                 meeting on March 16th, 2010, the Board of Statu-         In accordance with the Bylaws (Art. 19), sharehold-
                 tory Auditors con rmed the ful lment of the inde-        ers are entitled to attend a Shareholders’ Meeting if
                 pendence requirements in accordance with Art. 148,       the noti cation required under Article 2370, second
                 paragraph 3, of the Legislative Decree 58/1998,          paragraph, of the Civil Code, reaches the Company
                 noting that the requirements were ful lled as stated     at least two days prior to the date set for the indi-
                 at the time of the appointment, including the inde-      vidual meeting.
                 pendence requirements of the Self-Regulatory Code           Telecom Italia does not impose a block on
                 of the Borsa Italiana.                                   shares as a requirement for attending a sharehold-
                    In 2009, the Board of Statutory Auditors held 28      ers’ meeting: shareholders are requested to deposit
                 meetings (6 of which were held jointly with the Inter-   their shares, that is, instruct the intermediary that
                 nal Control and Corporate Governance Committee).         keeps the relevant accounts to issue the noti ca-
                 The average duration of the meetings was three           tion. This does not prevent later withdrawal of the
                 hours. The percentage of attendance was 95%.             shares. However, if they are withdrawn, any earlier
                    In 2010, 14 meetings have already been held.          deposit ceases to be effective for the purpose of
                    Table 6 (attached to the full text of the Report)     entitlement to attend the meeting. Any requests for
                 provides information on the composition of the           advance notice to perform the relevant formalities
                 Board of Statutory Auditors at April 12th, 2010,         or the unavailability of deposited shares due to the
                 while table 7 (also attached to the full text of the     market practices of intermediaries is not in any way
      140        Report) gives information on the members of the          the responsibility of the Company.
   INTERNAL      Board of Statutory Auditors who left of ce in 2009.         Ordinary shareholders are entitled to exercise
STAKEHOLDERS     For detailed information about the activities carried    their right to vote by post, and to be represented,

  shareholders   out by the Board of Statutory Auditors, please refer     by issuing the appropriate proxy to an individual or
                 to the Board of Statutory Auditors’ Report, prepared     legal entity.
                 in accordance with Art. 153 of the Legislative De-          In order to facilitate the collection of proxies
                 cree 58/1998.                                            from ordinary shareholders who are employees of
                                                                          the company or associated subsidiaries, and mem-
                 Relations with shareholders                              bers of shareholders’ associations that meet the re-
                 An Investor Relations Manager manager, Elisabetta        quirements of current legislation, appropriate areas
                 Ripa, has been appointed from within the company         are made available for communication and for carry-
                 to oversee relations with the national and interna-      ing out the collection of proxies.
                 tional nancial community and all the shareholders.          In order to ensure the smooth running of Share-
                 Important information for shareholders, as well as       holders’ Meetings, the Company, in 2000, adopted a
                 existing and potential investors in general (includ-     speci c set of Regulations for Shareholders’ Meetings.
Group Sustainability
Telecom Italia S.p.A.
Corso d’Italia, 41
00198 Roma
Fax: +39 06 3688 2803


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